Importance of Life Insurance
You might think you are older, why would you need life insurance, right? There are plenty of good reasons including:
You still have debt
Your debt doesn’t disappear when you die. It becomes the responsibility of your estate. If you don’t want to leave your dependents with a big headache on their hands, help them out by carrying proper life insurance.
You have dependents
Think about who depends on you financially. Do you still have children at home? Do you have a spouse? Does anyone rely on you for financial support? Life insurance will continue to support your beneficiaries even upon your passing.
Providing for your family
Even if you don’t have ‘dependents’ per se, you may still want to provide for your family upon your passing. You can name your own beneficiaries and divvy up the proceeds as you desire.
Pay for final arrangements
Final arrangements are costly. If you want to help your loved ones cover the cost so they can properly grieve while preparing your services, carry enough life insurance to cover the cost of your final wishes.
May offer a tax benefit
Most life insurance benefits are tax-free. This gives you a more tax-friendly way to help your loved ones upon your passing without putting a tax burden on them.
Types of Life Insurance
You have many options for life insurance, even as a senior. Below are the most common options that offer the most benefits.
Term Life Insurance
Term life insurance is often the most affordable. It offers death benefits only and for a specific period or term. Since you are a senior, your ‘term’ may be limited to 10 years, depending on your age and the insurance company’s rules.
Typically, anyone over 70-years old may only get a 10-year policy and anyone between 60 – 70 years old can get a 20-year policy.
Within term life insurance, you have a few options:
Level term life insurance
This is the most common term life insurance policy. You choose a term and a death benefit. Your premium remains the same for the entire term and you have the same death benefit for the duration of the term.
For example, if a $10,000 10-year policy costs you $100 per month, you pay that $100 per month for 10 years. If you die within those 10 years, your beneficiaries get $10,000.
Convertible term life insurance
As the name suggests, you can convert this term policy into a permanent life insurance policy. The options for conversion vary by life insurance company, so make sure you know your options as well as what age you must convert by to exercise this option.
Annual renewable term insurance
You can renew this policy every year, but each year the premiums increase. It’s best for those that need coverage for the short-term (five years or less). You will know the premium beforehand, though.
Pros & Cons Term Life Insurance
- Term life insurance is the most affordable option, especially if you get it when you are young. Even as a senior, though, it offers affordable premiums for decent coverage.
- You can choose the term. You know how long you’ll be in debt or how long you need coverage and can choose the term accordingly.
- You can choose the amount of coverage based on your needs. You can choose to cover debt, final arrangements, or leaving money for your loved ones.
- It only lasts for a specified period. Once the term expires, you must take out another policy, which means more medical exams and typically higher premiums due to your older age and potential medical issues as you age.
- There’s no cash value. If you are still alive when the policy expires (which is a good thing), the policy simply expires with no benefit to you.
Whole Life Insurance
Whole life insurance, as the name suggests, is good for your whole life. In other words, it doesn’t expire. As long as you keep up with the premiums, you have coverage. A percentage of your premiums go into a cash value account.
This account grows according to the chosen investments. You can borrow from the fund or take withdrawals while you are still alive, but it also offers a death benefit similar to term life insurance (but it doesn’t expire).
It’s important to know that whole life insurance is more expensive than term life insurance because of its cash value and guarantee of benefits.
If your policy still has a cash value upon your passing, your beneficiaries may not receive it, so keep a close eye on the cash value and use it accordingly as you get older.
Guaranteed Universal Life Insurance
Guaranteed Universal Life Insurance is also a permanent life insurance policy. The guarantees pertain to the premiums – they remain the same throughout the term.
This policy’s value also doesn’t fluctuate with the market. You pay the same premium no matter what is happening in the market.
Pros & Cons Guaranteed Universal Life Insurance
- You can budget for your premiums. Your premiums never change so you don’t have to worry about unpleasant surprises moving forward.
- You can choose how long you set the premiums. This can be up to age 105 in many cases.
- You have guaranteed coverage for your lifetime or the period you choose.
- The premiums are typically higher than term life insurance policies because of the guarantee.
- You cannot miss any premiums or you could lose the policy and all that you already put into it.
Final Expense Insurance
Final expense insurance pays your final arrangements. It may also be called ‘burial insurance’ by some providers.
This policy strictly helps your loved ones pay for your funeral and burial, but some policies help cover end-of-life expenses including hospital bills.
It’s often easier to get this policy because there’s no medical exam required and there aren’t beneficiaries – the insurance company strictly pays for your final arrangements. You can typically get a policy up to $15,000.
No Medical Exam Policies
No medical exam policies are available even for seniors, but beware; they often cost much more than a standard policy. Insurance companies take a large risk when they don’t require a medical exam.
To make up for that risk, they charge much higher premiums. If you aren’t in ‘good’ or decent health, this may be a better option, if you think your insurance application would get denied.
If you are in decent health, though, it’s worth trying a standard life insurance policy with a medical exam as the premiums are much more affordable.
Best Life Insurance Policies
Looking for the best life insurance policies once you are over 50 is a little tricky. You need different benefits than you did when you were 20 or 30 years old. We’ve outlined the best life insurance policies for various ages below.
Best Life Insurance over Age 50
Haven Life by Mass Mutual
If you’re in good health and are looking for a term life insurance policy, you’ll find many options with Haven Life. They offer a transparent process and handle most of the application process online.
They are great with their customer service and provide plenty of education to help you through the process. They offer policies up to $3 million, but the exact amount of coverage varies based on your health, age, and financial need.
Best Life Insurance over Age 60
Mutual of Omaha
Mutual of Omaha provides life insurance options for those up to 80 years old, with the exception of their final arrangement policies which go up to age 85.
They offer smaller coverage options, starting at just $2,000 for final arrangement policies up to $25,000.
They offer a guarantee of sorts for their term policies, if you die within the first two years of the policy, they will pay your beneficiaries the premiums you paid plus 10% because you don’t get any benefits within the first two years unless your death was accidental.
Best Life Insurance over Age 70
Fidelity Life offers a large variety of insurance policies even for the elderly. You can choose from term, whole, guaranteed life, or final expense insurance.
They do limit their coverage amounts to a maximum of $150,000 but have a variety of options for people with many different health situations, but of course the better the health you are in, the lower your premiums and better your chance of approval.
Best Life Insurance over Age 80
Lincoln Financial Group
It’s hard to find life insurance at age 80, but Lincoln Financial Group does offer a 10-year policy. Their policies have a minimum benefit of $250,000 – the maximum depends on your age and health condition.
If you want/need to extend your policy after expiration, you may do so up until age 95 as long as you can afford the premium.
What’s the best age to get life insurance?
While there’s no ‘perfect’ age to buy life insurance, the younger you are the better off you‘ll be.
Life insurance premiums increase as you age as your risk of dying increases. Life insurance companies base your premiums on the risk that they’ll have to payout.
The older and sicker that you are, the higher your premiums will be.
Can I buy life insurance for my parents?
Yes, you can buy life insurance for your parents if you meet two requirements:
- You can prove that you’ll have a financial debt as a result of their passing. For example, if you’ll have to pay for their final arrangements or you’ll have to cover their debts, you have a financial interest in them.
- You have your parents’ approval/signature to take out the policy.
What happens if you outlive your term life insurance policy?
If your term life insurance expires, typically it just ends. But you may have a few options:
- Buy a new policy. Your premiums will be higher and your term may be shorter, but if you still need the coverage, you can shop around for the best policy.
- Renew your current policy. Some insurance companies allow you to renew your policy. Again, the premiums will be higher and the term may be different, but you’ll still have coverage.
- Convert your policy. You may be able to convert your term policy into a permanent policy. The premiums will be higher, but your policy will have a cash value.
When does your policy start?
Most insurance policies don’t pay benefits for the first two years, but each policy differs.
Make sure you know the fine print so that you don’t buy a policy that you can’t use.
What is the oldest age to buy life insurance?
Every insurance company differs, but in general, you can buy life insurance until you are 85. You will find some companies that max out the age at 75 or 80, though, so make sure you shop around and ask specific questions.
What is better, whole or term life insurance?
This is a personal decision. Term life insurance protects you temporarily, which can be great if you know you only need coverage while you have a mortgage or while your kids are at home, for example.
If you want a policy with a cash value that helps you save for retirement and/or pay your medical bills as you age, a whole policy may be better.
The Cost of Life Insurance
Lie insurance rates vary by age, health condition, and life insurance company.
On average, you may pay around $100 per month for a 10-year term life insurance policy, but as much as $1,100 per month for a whole or permanent life insurance policy.
Choosing a Policy
When choosing the right life insurance policy, make sure you look at all of your options. Get quotes for the same type of insurance (term or whole) from different providers.
Look at the fine print, know the costs, and renewal options before choosing the policy that suits your needs both now as well as in the future.