5 Good Reasons To Get Senior Life Insurance
Senior Life Insurance: You Have Options
It’s a common misconception that seniors can’t get life insurance. In fact, lots of life insurance companies will issue new policies up to age 80 or 85. As a senior, you might be able to choose from a full range of life insurance policies, including:
- 10-year term life: Often available up to age 80
- 15-year term life: Often available up to age 75
- 20-year term life: Often available up to age 70
- Whole life insurance: Often available up to age 75-80
- Burial insurance: Often available through age 85
If you’re considering senior life insurance for yourself or a loved one, there are two key questions to ask: Do you really need it? And which type of policy is right for you? We’ll help you find the answers to those questions here.
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In this article
- Do seniors need life insurance?
- 5 reasons to get life insurance as a senior
- Two types of senior life insurance
- Senior life insurance rates
- Other life insurance options
- Drawbacks of senior life insurance
- Senior life insurance FAQ
- The bottom line
Do seniors need life insurance?
Life insurance is a good idea for anyone who has dependents, large debts, or other expenses that might fall to somebody else if they pass away. That includes senior citizens.
Seniors might not have the same financial obligations as young families — like a new mortgage, young children, or college tuitions to think about. But there are still circumstances that can necessitate life insurance well into one’s 60s, 70s, and beyond.
For seniors who don’t already have life insurance, it might make sense to purchase coverage later in life if any of the following situations apply.
5 reasons you might need life insurance as a senior
- You have dependent(s) — This could be a spouse, child, family member with special needs, or anyone else who relies on you financially. Life insurance can provide steady income to your dependents well into the future, depending on the policy size
- You have a mortgage or home equity loan — Mortgage and home equity loans are two big expenses that might be passed on after you pass away. If you have a spouse or family member who’d keep living in the house, life insurance can help cover those payments after you’re gone
- You need to cover funeral expenses — A funeral with burial costs over $10,000 on average. And there are other after-life expenses (like selling the home) that need to be considered. If your estate or savings wouldn’t cover these expenses after you pass, a life insurance policy can protect your family from paying out of pocket
- You own a business — If you have outstanding business loans (especially ones secured against your property), an insurance policy can help cover repayment. The funds may also help your business transition smoothly or cover the cost of selling it if necessary.
As LifeHappens explains: “When the family is forced to sell the business quickly, they may have to sell at a discount or during market conditions that make the business less attractive. In other cases, the business may be worth very little without the proprietor or partner.”
- You have joint account holders on credit cards or loans — Not all debts are passed on to someone else after you die. Unsecured debts, like credit cards or personal loans, may simply be erased. But if there is a co-signer on one of those debts, they become responsible for repaying it when you die
You might also consider life insurance as a senior if you want to leave an inheritance.
Many of the expenses listed above (funeral, debt repayments, selling your house, accounting fees, etc.) can be paid out of your estate. Your estate includes savings and assets that can be liquidated.
Paying off expenses can eat up most of your estate. If you want to leave behind an inheritance but don’t have large savings, life insurance is one way to do that.
But once outstanding debts have been paid, there might not be much left over for your family members.
Life insurance can pad that nest egg, allowing you to leave a sizable inheritance to your loved ones — often at a relatively low cost during life.
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Two types of senior life insurance
Only two types of life insurance are specifically designed for seniors. They are guaranteed universal life insurance and guaranteed issue whole life insurance (often called “final expense” or “burial insurance”). Here’s a brief overview of the two types:
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NOTE: GUL is usually cheaper per dollar of coverage than burial insurance. However, coverage limits are so different for the two kinds of insurance that it’s difficult to compare rates head-to-head. Any price comparison should take your own coverage needs into account. You can request custom rates for final expense insurance here
Guaranteed universal life insurance
Guaranteed universal life insurance (GUL) is not branded “for seniors.” But in many ways it’s one of the very best life insurance options for those over 65. That’s because it strikes a compromise between term life insurance and whole life — offering a lower price tag like term, with the lifelong protection of whole.
How guaranteed universal life insurance works:
- You choose a policy size, usually $25,000 or more
- You choose when the policy expires, usually between age 90-120
- You apply and take a medical exam
- Your insurance company sets your monthly rate
- Rates are typically over $100 per month if you’re over 60
- You pay premiums every month
- The policy is paid out to your beneficiary when you pass away
Guaranteed universal life insurance technically has an expiration date. But the expiration age is meant to be late enough that policy will outlive you. In effect, this makes the death benefit payout “guaranteed” — just like a whole life policy.
Of course, for GUL insurance to payout, you have to stay current on premium payments for the duration of the policy.
2. Final expense or “burial” insurance
This type of insurance can be confusing — partly, because there are so many names for it. “Final expense insurance,” “burial insurance,” and “funeral insurance” are all the same thing. Another, more technical name is “guaranteed issue whole life insurance.”
“Final expense insurance,” “burial insurance,” and “funeral insurance” are all the same thing. Another name is “guaranteed issue whole life insurance.”
This policy is a simplified type of whole life insurance, meant for seniors or people with pre-existing health issues.
The main benefit? There’s no health exam involved in the application. So you can get final expense insurance even if you have a critical health condition that would ban you from getting other types of life insurance. That’s a helpful feature for many seniors.
How burial insurance works:
- You choose a policy size, usually between $2,000-$25,000
- You apply with NO medical exam
- Your insurance company sets your monthly rate
- Rates are typically under $100 per month for a policy worth $10,000
- You pay premiums every month
- The policy is paid out to your beneficiary when you pass away
Burial insurance is guaranteed to pay out if you keep up with the premiums throughout life.
The main thing to note is that the payout — or “death benefit” — is smaller with burial insurance than with any other kind of life insurance. That means it’s often cheaper for seniors than other life insurance policies (like GUL).
But it also won’t go very far toward providing for dependents or leaving an inheritance. Thus, burial insurance is best if you have limited life insurance needs.
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Senior life insurance rates
Life insurance is always more expensive for seniors. There are two reasons for that:
- Life insurance premiums increase with age. Simply put, the older you are, the “higher-risk” you are to a life insurance company, and rates are based on risk
- Seniors are more likely to have pre-existing health issues that affect insurance rates
Unfortunately, there’s no real way to get around higher life insurance rates as a senior. Especially if you have a pre-existing health condition.
If you take a medical exam and a health issue shows up, your rates will increase. And if you go the no-exam life insurance route, rates are higher across the board. That’s because insurers have to charge more to make up for the added risk of not knowing your health history.
The best way (really, the only way) to find affordable life insurance as a senior is to compare rates from multiple companies before buying.
The best solution is to compare rates from multiple life insurance companies before buying. That way, you can find the best deal on the coverage you need.
Average life insurance rates for 65-year-old
²Source: Lincoln Heritage Funeral Advantage
NOTE: The cost of life insurance varies hugely. The rates shown in the table above are a snapshot meant for comparison only. Your own rate will be different. Request custom quotes to see your life insurance rates today.
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Other life insurance options
There are other life insurance plans available to seniors, if not specifically intended for them. Term and whole life — the two most popular types of life insurance — may be an option for seniors as well depending on age, health, and budget.
- Term life insurance: The cheapest type of life insurance. Depending on the company, seniors may be able to get term life insurance up to age 75, 80, or 85. Seniors typically cannot get 30-year terms, but 10-, 15-, or 20-year terms may be available
- Whole life insurance: Typically the most expensive type of life insurance. Whole life insurance can accrue cash value, but purchased later in life this feature might not be as valuable. Whole life insurance is usually only recommended for those with very large estates
Term life insurance is generally regarded as “the best option for most people.” It’s affordable, and only provides coverage as long as you need it (often 10-30 years).
Term life insurance may also be a good option for seniors. It depends on the individual applicant’s age and health. Remember — term life insurance only lasts for a set time period and is not generally expected to pay out. Also, premiums rise steeply with age.
However, for seniors in relatively good health, term life insurance might still be the most affordable option.
Whole life insurance has its own unique benefits, with the ability to grow cash value that you can withdraw or borrow from throughout life.
But a whole life insurance policy purchased after age 65 would likely not have time to accrue much cash or interest, which diminishes its value. In addition, whole life is typically much more expensive than either term life or guaranteed universal life insurance.
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Drawbacks of senior life insurance
For some, purchasing life insurance after age 65 is a wise choice. It can provide a much-needed safety net for loved ones, either by creating dependable cash flow or by protecting one’s family from inheriting large debts.
But a senior life insurance policy doesn’t make sense for everyone. If purchased without real need — or if the wrong kind of policy is chosen — life insurance can be a bigger financial burden than it’s worth.
Before buying life insurance as a senior, consider:
- Life insurance rates go up as you get older
- Pre-existing health conditions might block you from certain types of life insurance
- No-medical-exam life insurance is more expensive than “fully-underwritten” insurance
- A high-rate insurance plan paid over multiple decades could potentially cost more than the policy is worth
- If rates are too high, a savings account, investment plan, or trust fund might make more sense
This isn’t meant to scare you away from life insurance. But it’s important to realize this type of plan isn’t for everyone. Make sure you’re aware of the cost versus the benefit before signing on.
Finally, remember that both types of senior life insurance (GUL and burial insurance) only pay out if you pay premiums for the duration of the policy. In this case, the “duration” is the rest of your life.
It’s a big financial commitment, and the long-term benefit to your loved ones should be significant enough to be worth it.
Senior life insurance FAQ
What is best life insurance for seniors?
Typically, the best life insurance for seniors is either guaranteed universal life (GUL) or burial insurance. GUL is better for seniors with a large life insurance need. It can create longer-term cash flow or cover large debts. Burial insurance is often best for seniors with limited coverage needs. For example, if you need to cover funeral costs and little else. Term life insurance is another good option for seniors in strong health.
Can I buy life insurance for my parent(s)?
Yes, you can buy life insurance for a parent. A life insurance policy can help cover expenses left to you after a parent passes — especially funeral costs, which can be a large financial burden on family members if there is no financial plan in place. To buy life insurance for a parent, you just need their consent and proof of your insurable interest. “Insurable interest” simply means you’d experience financial loss if that person passes away.
How much does life insurance cost for a 70 year old?
At any age, life insurance costs vary depending on the type of policy, amount of coverage, insurance company, the applicant’s health, and whether or not they take a medical exam. For example, these sites all offer “average” life insurance rates for a 70-year-old man:
Is term or whole life insurance better for seniors?
Term life insurance is likely better than whole life insurance for most seniors. Primarily, because term life is far cheaper. Whole life insurance is much more expensive due to the cash value component included. But for seniors buying a brand new life insurance policy, that cash value component may not provide much value; it can be withdrawn or borrowed from during life, but typically won’t be passed on to beneficiaries after the policy holder passes away.
What is the cheapest life insurance for seniors?
Term life is the cheapest kind of life insurance. However, it’s hard to make a blanket statement about life insurance costs for seniors. That’s because age and health have such a big impact on rates. Guaranteed universal life insurance and burial or “final expense” life insurance can also be relatively cheap for seniors, depending on policy size. A smaller policy (with a lower “death benefit”) always costs less than a larger one.
At what age should you stop term life insurance?
Many people stop term life insurance in their 50s or 60s. That’s because it’s often purchased around life’s big financial events (starting a family, buying a house, etc.) and then the policy expires in 10 to 20 years. But there might be reasons to maintain term life insurance as a senior; for instance, if you still have a mortgage or dependents. Some policies even have a renewal clause that lets you extend coverage without taking a second medical exam. This can help you avoid much higher premiums later in life.
Should I buy life insurance in my 60s?
You might want to buy life insurance in your 60s or later if: You still have dependents; your savings wouldn’t cover funeral expenses; you’d want to help a surviving spouse cover mortgage payments or rent; you have shared accounts or co-signed debts, or you own a business. These are only general guidelines. We recommend speaking with a financial professional to figure out whether you should buy life insurance in your 60s or later.
Senior life insurance: The bottom line
Buying life insurance is an incredibly personal decision. The “right” choice depends on your age, your health, your financial portfolio, your family’s needs…
In other words, we can’t tell you what the right or wrong decision is. To find out for yourself:
- Get your finances organized
- Figure out what expenses and debts would need to be covered after you pass away
- Determine whether your current savings and assets would cover those costs
- Compare your life insurance options
- Compare rates from multiple companies to find an affordable plan
If you think you or a loved one need senior life insurance, you can connect with insurers to compare options and rates using the link below.
