It can be hard work finding life insurance policies that cover seniors.
But's not impossible to find a life insurance policy to meet your needs at any age.
As long as you know what to look for and are prepared for a little extra expense.
Our guide will help you navigate your search. Good luck!
What Is A Life Insurance Policy?
A life insurance policy is a form of financial expense insurance that is paid out when the policyholder dies.
Thus, life insurance is very different from health insurance. As you might expect, as we grow older, the risk of our passing on increases every year.
So, the cost of a life insurance product will increase each year to reflect this risk. You may not need a life policy if you already have a substantial amount of savings in the bank or have set aside the expenses associated with your passing.
However, if you have:
- Debts that you need to settle that could be passed on to others if they are not paid in full
- A spouse (or other dependants) who has been relying on your income
- A need to pay for your funeral costs and other associated burial costs
- Huge amounts of estate taxes that you don't wish to pay
- A desire to leave an inheritance that your current circumstances won't provide for
You may find that a life insurance policy is the way forward.
Types Of Life Insurance Policies
Before you rush out and start engaging life insurance companies, you should be aware that there are many different types of life insurance.
And they each come with different death benefits and the best life insurance coverage for you, may not always be the best life insurance for somebody else.
Term life insurance is a form of temporary insurance.
Thus a “term life insurance policy” is only where you are insured for a fixed period of time and then when the term expires, no death benefit can be paid.
This kind of life insurance is cheap. However, they may not offer a term life insurance to those past a certain age.
In our experience, if you're in good health, then you can usually secure a 10, maybe 20, year term life insurance policy when you're in your 60s or even 70s but if you're older than that? You're unlikely to qualify.
Permanent Life Insurance: Lifelong Coverage, Guaranteed Issue Life Insurance
There are two forms of permanent life insurance. The first is “lifelong coverage” – this is a form of whole life insurance that pays out a death benefit no matter when you pass away.
Whole life insurance offers a solid death benefit and it also creates a kind of “savings account” that you can draw down on if you need to – though probably not for the first decade or so.
The downside of whole life insurance is that it's expensive. It might be the best life insurance for you, but still, be beyond your means to purchase. The older you are, the higher the premiums for this kind of product.
There is also another form of permanent insurance and that's “guaranteed issue life insurance” and the insurance company will not expect you to attend a medical exam if you choose this means of buying life insurance.
This can be a big deal if you know your health is bad and that a medical exam is likely to disqualify you from other types of life policies, however, we should note that death benefits are usually only payable if you survive at least two years from the date of your first life insurance premiums. If you die before then, they may issue a small death benefit or refund the premiums.
You might think of this as final expense insurance, final expense insurance is bought from a funeral home and when you die the only benefit on death paid is the one to the funeral home.
As you might expect, final expense insurance is useful if you want or need a specific type of funeral. We should note that it's not the same as “burial insurance” which is usually included in other types of life policy. Burial insurance can be paid to anyone to help with the expenses of your funeral, not just the funeral home.
Guaranteed Universal Life Insurance
You can also find guaranteed universal life insurance. This is the best life insurance if you don't want to purchase life insurance over and over again.
It combines both temporary and permanent forms of senior life insurance and it will require a medical exam if you want to buy insurance of this style.
It has lower monthly premiums than a whole life policy but still tends to offer solid benefits on death. This form of senior life insurance is “guaranteed” because the benefits are paid as long as you pay your premiums, no quibbles about your age, etc.
How Much Is Life Insurance Going To Cost?
How long is a piece of string? Unfortunately, life insurance for seniors is a complicated matter when it comes to charges and the cash value of a policy is often not much better than the final expenses it may payout.
However, women tend to pay lower rates than men do, as they tend to live longer than men.
You will then pay a certain fee for the type of policy that you select -with whole life being the most expensive and a 10-year term, generally being much cheaper.
And finally, you will also find that the insurance company makes a difference to the costs you pay.
So, a woman in her mid-60s might pay from $47 a month to $349 whereas the same woman at 80 might need to pay from $153 a month to $1,345 and will no longer qualify for a ten-year term at all.
Whereas a man in his mid-60s would be looking at $62 – $414 and by the time he reached his 80s, it would be between $228 and $1,579! Again with no ten-year term being available to him by the time he reaches 80.
It is important to look at the cash value of the benefits offered when opting for life insurance for seniors. You may find it's cheaper to meet any final expense yourself rather than keep paying steep premiums in your 80s and beyond.
How To Shop For Life Insurance Companies For Seniors
So, how do you find the best life insurance companies for life insurance for seniors?
Well, we'd suggest you follow a simple three-step set of considerations before you opt for your life insurance for seniors and it won't always be the cheapest life insurance that is the best senior life insurance policy.
- Ruthlessly shop around. How much insurance is often depends on the company offering it, as long as your insurer is a reputable business? It doesn't really matter about their brand. So look at every single form of seniors life insurance that you think might be applicable and see if they can deliver value for your budget and that they meet your final financial goals too.
- If you opt to use a financial advisor to purchase a policy, always use a fee-only advisor. This is doubly true if your life policy will include any kind of investment – make sure your interests are entirely separate from your advisor's interests.
- Read the policy documents carefully before you sign. If it seems too good to be true, there's probably a reason for that in the small print. Go through each policy with a fine-toothed comb and ensure that you understand exactly what is covered and what is not for the premium you pay.
Consider Life Insurance Riders
A rider is an additional feature that you can add to the policy that you are buying.
You may need to pay an additional fee for a rider to be added, though some companies may include a rider as part of their standard policy.
You should ask the companies you are looking at policies with if they can supply a list of potential riders and fees as they can vary wildly from company to company.
Some typical riders include:
- Accelerated death benefit rider. This is a way of helping to deal with medical bills and living expenses if you are diagnosed with a fatal health condition that requires long-term care.
- Long-term care rider. As the name suggests this will help to pay for long-term care either in your own home or in a nursing facility.
- Child rider. This rider pays an extra guaranteed death benefit for those who have young children and who die within a certain part of the policy coverage period.
Final Thoughts On Seniors And Life Insurance
As you can see it can be hard to find an insurance provider for life policies for seniors, however, it is possible to get life coverage and it may well be worth the higher premiums to do so in certain circumstances.
The best way to decide if you need such a plan is to talk to a certified financial planner who can help you work out whether it will suit your financial situation or not.