Why do seniors need life insurance?
Congratulations on successfully raising your family and securing your retirement. If you had a term life insurance policy that recently matured, you may be wondering if you need a new one and what type would be best. As a senior, you might think that insurance is unnecessary, but it can still be a valuable safety net for you and your loved ones.
You may have already paid off your debts, including your mortgage and children’s college fees, and have adequate savings to cover unexpected expenses. If this is the case, you may not need life insurance in your 60s or 70s. However, life insurance can still provide peace of mind, especially if your dependents or beneficiaries rely on you financially.
So, how do you decide if you need life insurance and which type is best for you? It’s essential to evaluate your financial needs and personal circumstances carefully. For seniors, term life insurance may be more affordable and straightforward, while whole life insurance can offer lifelong coverage and cash value accumulation. Ultimately, the decision depends on your unique situation and priorities.
Life insurance for senior citizens can be beneficial for various reasons:
- Firstly, a policy payout can ensure that your partner or spouse receives quality care as they age or their medical expenses increase.
- Secondly, final expense policies can cover medical bills and funeral expenses, preventing additional financial burden at a time when your family is already grieving. On average, funerals can cost $10,000 or more.
- Thirdly, life insurance can cover credit card debts or other outstanding debts so that your family does not have to bear the costs after you’re gone. According to surveys, older adults between 66 and 71 years old have an average of $22,951 in non-mortgage debt.
- Fourthly, if you’re still in good health, life insurance policies and riders can be an affordable way to provide financial support if you are later diagnosed with a serious illness or require other care.
- Lastly, a policy can also serve as an inheritance for your loved ones. Life insurance can financially protect your family’s future, whether you want to leave something behind for your children or grandchildren.
How much life insurance do seniors need?
Your financial situation may change as you age, but the responsibility to protect your family remains the same. A senior life insurance policy can provide for your loved ones after you are gone, just as you did throughout your life.
Even if you have retired or no longer have the same financial obligations, it is important to plan for the expenses that arise towards the end of life. Funeral costs, in particular, can quickly add up, so it is essential to prepare in advance to avoid putting an additional financial burden on your family during an already difficult time. The average cost of a funeral is around $10,000.
Life insurance is designed to support your loved ones financially during your death. This support can help them avoid out-of-pocket expenses like funeral or burial, cremation, service arrangements, and trips to scatter ashes.
In addition to covering funeral expenses, life insurance can provide financial assistance for other end-of-life expenses, such as medical bills, hospice care, nursing home care, and other healthcare expenses. It can also help with daily living expenses for your partner or family, pay off credit cards, car loans, or other debts, cover housing payments for your partner or family, including mortgage payments or assisted living costs, and provide an inheritance for your children or other relatives to make a down payment on a house, pay down debts, or travel.
What is the Best Life Insurance for Seniors?
When searching for the best life insurance for seniors, there are some important questions you should ask yourself, such as how much coverage you need, what kind of life insurance suits you the best, what kind of policy is best for your family, how much you can afford, and whether you can get approved for the policy you want.
To begin answering these questions, you should review your financial situation. Think about your dependents, such as your spouse, kids, or anyone who relies financially on you. Do you have significant bills like a mortgage or car payment that must be paid when you’re gone? If so, you should consider purchasing a policy to protect your family from unforeseen costs. Even if you believe your dependents are well cared for, it’s still worth considering life insurance because your family may need to pay estate taxes, end-of-life medical bills, and burial costs, which can be expensive.
How much coverage you require depends on various personal factors, including your marital status, family size, debts, assets, and end-of-life goals. The Wall Street Journal recommends purchasing coverage equal to 8 to 10 times your annual income as a general guideline. If you have life insurance through your employer, the coverage may not be sufficient and may terminate when you retire.
Don’t forget to factor in other costs, such as funeral expenses, debt repayment (mortgage, car loans, and credit card debt), and any medical bills related to your passing. You may also want to leave a financial gift for your spouse, children, or charity. Your needs will change over time, so periodically review your policy to ensure it meets your financial requirements.
Here are some factors to consider for each significant type of policy that will assist you in selecting the best life insurance for seniors.
Whole Life or Term Life Insurance for Seniors?
When deciding between term and whole life insurance, it’s essential to consider your age and your budget. Remember that as you get older, renewing a term life insurance policy can become challenging, making whole life insurance a more viable option for seniors.
Term Life Insurance for Seniors
Term life insurance benefits beneficiaries only if the insured person passes away during the term of the policy, which typically lasts from one to 30 years. Most term policies do not offer additional benefits besides the death benefit. There are two main types of term policies: level-term, where benefits remain constant throughout the policy’s term, and decreasing-term, where benefits gradually decrease over the policy’s life. For a ten-year term life insurance policy with a $200,000 death benefit, healthy men over 70 can expect to pay between $122 and $435, while healthy women will pay between $66 and $194 for the same policy.
Whole Life Insurance for Seniors
Whole life insurance, also known as permanent life insurance, benefits the policyholder regardless of when they pass away as long as the policy is still active. These policies typically last for the policyholder’s entire life, and some accumulate cash value over time, which can be distributed as a loan. It’s important to note that policy loans must be repaid while the policyholder is still alive, or the loan amount will be deducted from the benefit at the time of death. The death benefit and insurance premium remain the same for traditional whole-life policies throughout the term.
For seniors looking to purchase whole-life insurance, healthy men should expect to pay between $1,122 and $2,089 monthly for a $250,000 death benefit. Women in good health will pay between $934 and $1,801 for their whole-life policies.
Another option for seniors is to buy final expense life insurance, a type of whole life insurance. With this policy, you can usually avoid taking a medical exam and only have to answer a few health questions on the application. Premiums are significantly lower, making it a popular choice for seniors. If you purchase this plan, men can expect to pay roughly $43 to $286 per month for a $10,000 policy, while women will pay about $33 to $211.
Guaranteed Universal Life Insurance for Seniors
Universal or adjustable life insurance offers more flexibility than standard whole life insurance policies. Some universal policies allow you to reduce or skip payments, but this may cause the policy’s value to increase slowly because you are covering costs with the current cash value.
If you have health conditions that make it challenging to qualify for term insurance, guaranteed universal life insurance may be a good option for you. It is a combination of term life insurance and whole life insurance. However, you will still need to undergo an underwriting process, just like when purchasing a term life insurance policy for seniors.
Final Expense Insurance for Seniors
Final expense insurance, also known as burial insurance or funeral insurance, is a type of whole-life insurance that aims to assist your loved ones with funeral expenses and other end-of-life costs, such as unpaid medical bills. As per the National Funeral Directors Association, funerals cost more than $9,000 today. Final expense policies are quite popular among seniors as they do not usually require a medical examination to qualify for coverage. Instead, the policy is issued based on the answers to the health questions on the application. Policy rates are generally more affordable than other types of life insurance, as the policy amount is typically much smaller, ranging from $10,000 to $15,000.
Affordable Life Insurance for Seniors
When considering purchasing senior life insurance, it’s important to consider your entire budget and any potential future changes to your finances.
While some may be tempted to opt for the cheapest life insurance available, these policies may not fit seniors best. ‘
Instead, choosing a policy with benefits that most effectively support your surviving loved ones is advisable. The cost of your policy will depend on variables such as your age, sex, overall health, and the coverage amount you select.
For those looking to ensure their funeral costs are not passed on to loved ones, a final expense insurance policy may be the most affordable option, with premiums as low as $15 per month. However, if you wish to leave behind a more substantial inheritance for your beneficiary, a term or whole-life plan may be better if it aligns with your budget.
No Medical Exam Life Insurance for Seniors
Obtaining senior life insurance is not out of reach, even for those who believe their age or health condition may hinder their chances of approval. With advancements in insurance underwriting and the availability of specialty insurers who cater to higher risks, almost everyone can secure life insurance coverage.
You will be asked to complete an application once you have identified a policy and provider that suits your needs. The application requires personal information such as age, height, weight, health status, and life insurance policies. Some insurers may require a medical examination to qualify.
Some insurers offer life insurance coverage for smaller policies without needing a medical examination. Final expense insurance for seniors is usually granted based on responses in the application’s health questions section. It is crucial to answer all questions truthfully to ensure accurate coverage. Inaccurate information can lead to policy cancellation or denial of death benefits.
While guaranteed issue life insurance (also known as guaranteed life insurance) plans are available, they are generally expensive and may not be affordable for most people.
Life insurance options by age for seniors
Navigating life insurance options becomes increasingly nuanced with age, and adapting your coverage to align with changing circumstances is essential. This guide explores customized life insurance solutions for individuals at different stages, considering their unique needs and preferences.
Age 60 and Beyond: Life insurance decisions become more critical as you transition into your 60s. Shifting priorities such as retirement, potential health changes, and estate planning necessitate reevaluating your current policy. Consider transitioning from term life insurance to a more flexible universal life insurance. This allows you to adjust the death benefit as circumstances change, all while accruing interest on the cash value. For instance, men over 60 may find a universal life insurance policy with a $250,000 death benefit of around $627, while women expect to pay approximately $546.
Age 65: Extended working years and the responsibility of supporting dependents often characterize life after 65. To address these evolving needs, individuals must assess their financial goals. Term life insurance remains a viable option for those on a budget with specific short-term objectives, such as paying off outstanding debts. Alternatively, whole life insurance, which covers a lifetime and accumulates cash value, may suit those without immediate obligations but wanting to leave a financial legacy. Final expense insurance, a variant of whole life insurance, presents a cost-effective solution, with premiums typically in the $50 per month range for a $10,000 death benefit.
Age 70 and Beyond: Life insurance considerations for those over 70 shift towards managing potential expenses and providing financial support for loved ones. Final expense insurance emerges as a practical choice due to its affordability. While term life insurance becomes more expensive, individuals can secure a final expense policy with a $10,000 death benefit for approximately $81 per month for men and $61 per month for women.
Age 75 and Beyond: Options for those over 75 become more limited but remain vital for legacy planning. Whole life insurance is available for healthy individuals, averaging around $2,000 per month for men and $1,800 per month for women. For those facing health challenges, guaranteed universal life insurance becomes viable, offering coverage without accumulating cash value. Additionally, final expense insurance remains an affordable alternative, with healthy men and women over 75 paying around $123 and $101 per month, respectively, for a $10,000 death benefit.
Age 80 and Beyond: Securing life insurance beyond 80 presents challenges, given the limitations on term life insurance. Whole life insurance, while available, may not be the most cost-effective choice due to a delayed break-even point. Final expense insurance emerges as a pragmatic alternative, offering coverage for burial expenses. Men over 80 can expect to pay around $183 per month, while women will pay approximately $145.
Age 85 and Beyond: Although obtaining life insurance after 85 poses challenges, it remains advisable for those with specific financial considerations. Final expense insurance, with its lower death payouts, provides an affordable solution. Men over 85 can secure a $10,000 final expense plan for $183 to $286, while women can acquire coverage for approximately $136 to $211.
Age 90 and BeyondSecuring life insurance beyond 90 becomes increasingly challenging, with most companies reluctant to issue policies. While some insurers may consider coverage, be prepared for significantly higher premiums.
The Worst Life Insurance Companies For Seniors 2023
If you are over 50 and searching for life insurance, avoiding the following life insurance companies is best. The businesses listed in this article are among the most unreliable life insurance providers for older adults in the United States!
We have compiled a list of life insurance companies that may not be the best fit for older individuals based on customer complaints, price compared to competitors, and overall customer satisfaction. The life insurance industry is incredibly competitive, with hundreds of companies vying for customers.
Here are some of the most terrible life insurance companies in the country, and we urge you not to use them under any circumstances.
1. Colonial Penn
Age limits: Between 50 and 85 years
Maximum Amount of Coverage: Up To 12 Units
The time frame for eligibility: two-year requirement
No New York State included.
Does it have an expiration date? No
Colonial Penn uses a marketing tactic where policies are sold in units that cost $9.95 each. This can give the impression that one can obtain large amounts of coverage for a low price. However, it’s important to note that each unit covers less as you age.
One positive aspect of Colonial Penn is that they offer insurance to anyone, even those who have cancer or are on dialysis. However, other guaranteed issue companies may offer lower prices.
| Age | Male 1 Unit | Female 1 Unit |
|---|---|---|
| 50 | $1,786 | $2,083 |
| 60 | $1,214 | $1,621 |
| 70 | $717 | $1,043 |
| 80 | $426 | $620 |
2. Lincoln Heritage
Age Limit: Starting from newborns up
Maximum Amount of Coverage: Up To $35,000
Time it takes before use: Can be different (depends on the item)
Not available in New York State
Will it run out? No.
We’re not recommended. Lincoln Heritage because:
It’s important to know that Lincoln Heritage is significantly more expensive than other insurance companies that offer the same coverage. They may argue their higher prices are justified because they include additional benefits such as Funeral Consumer Guardian Society membership. However, you can find these benefits elsewhere for free.
In addition, it’s worth noting that most people won’t be eligible for their top-tier plan, which is the one that they advertise to grab your attention. Instead, they’ll offer you a modified plan with a substantial price increase.
Many customers have complained about Lincoln Heritage’s aggressive marketing tactics and sales presentations. You don’t need to pay more than you should for your life insurance, and that’s precisely what you’ll be doing if you choose Lincoln Heritage.
| Age | Male Level $10,000 | Male Modified $10,000 | Female Level $10,000 | Female Modified $10,000 |
|---|---|---|---|---|
| 50 | $38.60 | $88.70 | $33.90 | $83.40 |
| 60 | $56.60 | $106.70 | $44.80 | $94.90 |
| 70 | $82.50 | $145.90 | $75.30 | $128.10 |
| 80 | $183.20 | $202.80 | $145.00 | $182.20 |
3. AARP
Appropriate age range: Approximately between 50 to 80 years old (depending on the
The amount of coverage provided will vary depending on the product
Time until the product is available: This can be different depending on the item.
Options for Location: Every state
When will it end? It all depends on the item.
We’re not recommended because of these reasons:
AARP offers three New York Life policies, each requiring a monthly membership fee.
AARP Term Life
Our flagship product is term life insurance, which covers up to $100,000. However, it’s important to note that this term product is designed to expire at age 80. If you pass away after age 80, your family will not receive any benefits from the policy. For this reason, we do not recommend this product and suggest that you consider other options for term life insurance that offer better prices and more comprehensive coverage.
AARP Simplified Issue
Level (simplified issue) is a company on our list that offers no waiting period for their whole life burial insurance policy. Still, qualifying based on your health and medications would be best. However, their prices are comparatively higher than similar products other companies offer. Additionally, qualifying for this product is more difficult compared to other options. You can find better prices for this type of policy with other companies.
| Age | Male $10,000 | Female $10,000 |
|---|---|---|
| 50 | $33 | $25 |
| 60 | $48 | $37 |
| 70 | $79 | $63 |
| 80 | $123 | $100 |
4. Globe Life Insurance Company
Age limit: Between 18 and 79 years
Insurance protection provided: $5,000-$100,000
No delay is required.
Available in all states
Will the validity of this expire? Yes, when you reach 90 years old.
Reasons that we don’t recommend this insurance company:
Globe Life may not be the best choice for seniors looking for life insurance. Although their initial premiums are attractively low, they tend to increase every five years, making it very expensive to maintain the policy in the long run.
Moreover, the policy expires when the policyholder turns 90. As a result, many seniors approach us to replace their Globe Life policies, as they find it difficult to afford the high premiums.
We assist them in finding better insurance options that offer more reasonable rates and are locked in for life. Below are some of the rates for Globe Life, which show how the premiums increase over time. These figures assume you are healthy and have no underlying medical conditions or prescriptions.
| Age Bracket | Female $10,000 | Male $10,000 | Female $20,000 | Male $20,000 |
|---|---|---|---|---|
| 51-55 | $13.00 | $17.91 | $23.61 | $33.49 |
| 56-60 | $16.14 | $23.16 | $29.74 | $43.60 |
| 61-65 | $20.28 | $30.84 | $37.89 | $58.49 |
| 66-70 | $26.19 | $42.24 | $49.58 | $80.73 |
| 71-75 | $35.38 | $59.54 | $67.81 | $114.79 |
| 76-80 | $49.72 | $79.46 | $96.41 | $154.59 |
| 81-85 | Unknown (Not Public) | Unknown (Not Public) | Unknown (Not Public) | Unknown (Not Public) |
| 86-90 | Unknown (Not Public) | Unknown (Not Public) | Unknown (Not Public) | Unknown (Not Public)
|
FAQ
What is the ideal age to buy life insurance?
The best time to buy life insurance for affordable coverage is typically before turning 30. However, the ideal time for purchasing life insurance may differ based on an individual’s health, budget, and reason for buying insurance. Although you may not have children or a mortgage at a younger age, younger applicants tend to be the least expensive to insure. However, it’s possible that you might not be able to afford life insurance when you’re young. In this case, the best time to consider life insurance might be after a significant life event, such as getting married, buying a home, or having a child. Suppose you think you’ll need life insurance eventually. In that case, it’s advisable to consult a licensed insurance agent or financial professional to determine the best time to buy life insurance based on your circumstances and financial goals.
To find the right option, it’s essential to understand your needs and research various companies. If you’re unsure what to do, you can always work with a licensed life insurance agent who can provide more guidance.
How do I find cheaper life insurance?
To find the cheapest life insurance company that suits your needs, it is essential to assess your coverage requirements. While searching for various options may help you save money, it is necessary to note that life insurance rates do not vary as much between companies as home or auto insurance rates. Moreover, discounts are not available for life insurance. Collaborating with an agent to analyze the best policy type, coverage level, and riders for your circumstances can help you discover a policy that meets your needs and budget.
How much life insurance do I need?
Determining the right amount of life insurance coverage to purchase can be overwhelming, but helpful strategies can ease the process. To determine the amount you need, consider important factors such as your outstanding debts, your household income contribution, and your children’s financial goals (such as saving for their college education). Following a guide or using a calculator can help determine the amount of financial protection you require based on these factors.
