Finding the best, most affordable life insurance for seniors may seem daunting. However, there are actually many choices available in terms of policy types and coverage limits, even for seniors over 60, 70, or 80.
The key to finding the best senior life insurance is first determining the specific need for coverage, comparing your eligibility for guaranteed or term life insurance, and then working with a top life insurance company to get cheap life quotes.
Is Life Insurance For Seniors Really Worth Buying?
Although some Americans think that life insurance is only for families with young children or financial dependents, there are actually a multitude of reasons why seniors may need to have life insurance too. After all, a life policy is an essential part of any good financial plan regardless of age.
The quick list of reasons you may need to buy life insurance for senior citizens include:
- Final Expenses – funeral expenses and medical bills
- Income Replacement – covering living costs and credit card bills for people who still depend on you financially
- Outstanding Debts – paying off a mortgage, car loan, student debt, business loans, etc.
- Special-Needs Child – you may need to provide financial support for a special-needs dependent after you pass
- Estate Taxes – permanent life insurance can help your heirs avoid estate taxes
The best part is that life insurance benefits are generally non-taxable so your family will receive the full lump sum payment without paying any taxes.
Statistics About U.S. Senior Citizens
As the Baby Boomers continue to make their way toward retirement, keep these statistics in mind:
- In 2012, there were 43.1 million Americans over the age of 65.
- It is estimated that approximately 10,000 U.S. citizens turn 65 years old each day.
- By 2050, the number of senior citizens is projected to be over 80 million.
When Senior Life Insurance Doesn’t Make Sense
While life insurance companies and agents may try to sell you coverage, a policy for seniors is not always necessary. If any of the following situations apply to you, you probably don’t need to buy life insurance as a senior citizen:
- Your funeral expenses are covered
- You have significant savings or a comprehensive retirement plan
- You do not have any one financially dependent on you
- You have no outstanding debts or obligations
- You have long term care insurance
Types of Senior Life Insurance
Seniors have the option of buying term and permanent life insurance policies. However, buying term life insurance will pose more of a challenge and may result in some policy limitations. For example, even the top life insurance companies have cut off periods for certain ages, after which specific types of term life insurance are no longer available.
In other words, a 65 year old will not qualify for a 30 year term policy, but may buy 10 or 20 year term life insurance. Seniors over 70 can only purchase a 10 year term policy, and for seniors over 80, there may be no term life insurance policies available at all.
Nevertheless, there are guaranteed and whole life insurance policies for seniors you can buy at any age, especially since almost anyone is eligible for guaranteed issue life insurance.
How To Choose Senior Life Insurance
Life insurance companies take into consideration several factors when senior citizens apply for coverage. Two of the key criteria are the applicant’s age and health. Though, if you have health issues do not allow that to hinder you from seeking a great policy, such as finding life insurance with diabetes. With that in mind, the best type of life insurance to purchase may depend on your actual age at the time you apply for a policy as well as the specific need that you are covering.
Term Life Insurance For Seniors
If you are over 60 and have a mortgage on your home that has a remaining balance of 20 years, then you may want to consider a 20-year term life insurance policy. This is because term life insurance for seniors is cheaper than comparable permanent policies, and the term policy will cover you and your family for the duration of time you need it. Whenever possible, buy term life insurance because it is the cheapest type of policy that will provide the largest amount of coverage.
Whole Life Insurance For Seniors
If you are in your 60s and are seeking coverage that will pay your anticipated estate taxes, you are likely better off going with whole life insurance for seniors. There are several reasons for this.
First, nobody knows exactly when they are going to die. A permanent life insurance policy – as the name implies – is permanent. This means that, as long as you continue to make the premium payments, the policy will remain in force. Unlike with term life insurance, you do not have to worry about coverage running out after 10, 20 or 30 years.
Second, a permanent life insurance policy will also build up cash value over time. This cash can grow tax-deferred, meaning that there are no taxes due on the gain until the time of withdrawal. If you should need cash for any reason, you will be able to either borrow or withdraw the funds from the policy.
Please note that if you have an unpaid cash value balance upon death, the amount will be deducted from the death benefit paid out to your beneficiaries.
Can I Get Life Insurance Without A Medical Exam?
A key part of applying for term life insurance is taking a medical exam. For many seniors, this can be a concern as health issues become more common with age. Fortunately, there are life insurance policies that don’t require an exam.
Typically referred to as “no medical exam life insurance”, this type of coverage will usually have a maximum death benefit of $250,000, depending on your age and the insurance company. Although there is no medical exam needed, you will still be required to answer a medical questionnaire. Because the insurer is taking on more risk, no exam life insurance policies have higher premiums.
Life Insurance For Seniors With Serious Health Problems
For those seniors who have more serious health issues, guaranteed issue life insurance may be an option worth considering. Guaranteed life insurance for seniors does not require a medical exam and you don’t have to fill out a detailed medical questionnaire. However, the death benefit amount is limited between $5,000 and $100,000.
Furthermore, your payout would be graded, meaning senior citizens must own the policy for at least 2 or 3 years before a full benefit is eligible to be paid out. Otherwise, if death occurs within the first few years, your beneficiary will receive only a refund of the paid-in premiums, along with a stated amount of interest. In most cases, a graded life insurance policy could be a good option if you are seeking coverage to pay your final expenses.