Life insurance for seniors may seem unusual. Many people wonder, is it necessary?
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The short answer is yes, in many cases. When you’re in your later years, the last thing you want is to leave loved ones with unpaid bills for medical and funeral expenses. Those aren’t the only benefits of life insurance for seniors, though.
If you don’t know the benefits, you may overlook senior life insurance and its necessity, but we’re here to help you understand its true value.
Many people assume it’s either unnecessary or too expensive. When you shop for the right insurance, though, neither is true.
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Life insurance used to be just for seniors who needed to protect their families financially in the event of premature death.
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In recent years, though, most seniors have stopped buying life insurance. They figure it’s too expensive and doesn’t need the coverage.
Studies show, however, that most people overestimate the cost of life insurance by as much as 200%. It’s time to find out the truth about life insurance for seniors in 2024.
In addition, studies have shown that almost a third of Americans believe that they need more life insurance, and many also believe that the unexpected death of the family breadwinner would have dire financial repercussions.
However, despite many people knowing its value, a majority would not consider purchasing a new policy in the foreseeable future. So, the question is not whether most people understand the importance of having it; instead, how can their perceptions about the actual cost of life policies be reconciled with reality?
The Life Insurance Industry in 2024
The pandemic changed the insurance industry, and not for the better. Life insurance companies are facing the consequences, and its effects were even greater in 2021 than in 2020 when the virus started.
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The life insurance industry is still figuring out how to pivot and change things for the better as we continue to endure the pandemic that many believe will carry on to 2024.
Globally, insurance companies paid out $2 billion more in the first three quarters of 2021 versus the entire of 2020. This was mostly due to the demographics. In 2020, most older people died of COVID-19, the lowest category of people with life insurance. In 2021, it hit the younger population, the most likely to have life insurance.
The Long-Term Aspect of Life Insurance
Here’s the problem life insurance companies face.
Life insurance is a long-term product. No one knows the long-term effects of COVID. There will likely be a lot more illnesses and death, affecting the insured and the insurance companies. While they haven’t increased premiums to reflect this risk just yet, it’s likely coming.
Right now, what we have on our side is competition. Most insurance companies are still operating, even though many went through their reserves with the onslaught of claims in 2021. This means many companies are still fighting for your business, so they won’t increase premiums yet.
How Insurance Companies are Responding
Life insurance companies are in a bind. They already provide the insured with a grace period to avoid a lapse in their policy or cancellation. Many companies are considering more deferral options to keep clients even though many cannot afford their premiums right now.
As the financial issues continue, many people have to let things go, and life insurance is often one of the first. Many life insurance companies consider letting clients repurchase their policies when they get back on their feet if the deferral program (letting them off the hook on payments for a short time) doesn’t work.
Applying for Life Insurance in 2024
The largest change we’ll see as consumers is how we apply for life insurance. Waiting periods may shorten, and the application process will become primarily virtual. Even paramedical exams may change.
Companies are looking for ways to be more virtual and less hands-on to reduce the risk of transmission of the disease. Insurance companies will also focus on paramedical companies that can administer the exam with strict COVID-19 protocols in place.
The key is to keep everyone safe, so we will likely see a significant change in applying for life insurance.
Final Thoughts
Life insurance is necessary – it helps our loved ones when we die. With the pandemic still going strong, everyone must have the coverage they need and can afford. With premiums remaining stable, now is the time to consider your options if you can afford them so you protect your family against the unexpected.
Why Do Seniors Need Life Insurance? – The Benefits
Life insurance protects you from the unexpected, or if you’re in your senior years, for the inevitable. It helps you provide your loved ones with the financial benefits of life insurance, protecting them even when you’re gone.
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Here are some of the added benefits of getting life coverage and situations where it makes sense:
You can cover your existing debt
Leaving your loved ones with your unpaid debt probably isn’t how you plan to leave them. Guaranteed level-premium term insurance is suitable for seniors still working to pay off debts. While you don’t want to overpay for life insurance, you should choose a term that expires just as the end of your debt, an amount that covers the debt, and a little more.
You are still working
If you’re still working, you likely need the income to survive. If you die suddenly, how would your loved ones survive financially? A term life insurance policy can protect your loved ones financially while dealing with the grief of losing you.
Your child is disabled
Cash value insurance may be a good option if you have a disabled child who needs ongoing medical care or assisted living. The extent of coverage will be on a case-by-case basis, but it is often enough to pay for your child’s expenses. Most parents with a disabled child choose a second-to-die policy as it only pays after the death of both parents.
You can provide a charitable legacy
Life insurance for seniors also comes in handy if you plan to leave a legacy for charity. For instance, rather than make yearly donations of $10,000, you can purchase life insurance worth $500,000 and pay for the premiums with the equivalent of your regular donation. The insurance policy will benefit you and the charitable organization if appropriately done.
You want to plan an estate
The proceeds from your cash value or permanent life policy could be used to provide immediate cash for your children. Your family can use the money to pay for funeral costs, state estate/inheritance, and federal taxes without selling jewelry, stocks, or properties.
You can transfer the policy to the trust if you have an ILIT (irrevocable life insurance trust). This protects the trust proceeds from creditors and estate taxation. An ILIT also removes the insurance value for senior citizens from your estate. This can be useful if your heirs are still minors or require financial protection.
Making an investment
A cash-value plan can also be a profitable investment. Most banks offer less than a 1 percent interest rate (taxable), while most cash value policies offer up to 5% tax-free today. If you have sufficient funds and have saved for emergencies, you can purchase variable life, universal life, or modified whole life insurance policies. These policies offer cash value that grows tax-deferred.
How Much Life Insurance Do Seniors Need?
No two people have the exact life insurance needs, especially seniors. How much life insurance you need depends on your lifestyle, financial situation, and what you can afford in monthly premiums.
If you’re wondering how much life insurance you might need, here are some things to consider.
Life Insurance for Ages 50 – 59
If you’re under 60, you might still be working. Your loved ones might still rely on your income, and you may still have kids at home.
At this age, you might need more life insurance than you would if you were older. Consider whether you still have a mortgage or other large bills, like college expenses, that you’d want to cover if you died.
If you’re still working, your spouse may rely on your income and need it replaced if you die prematurely.
The amount you need depends on your expenses and what else you want to leave for your loved ones.
Ask yourself:
- Do you need to replace your income for a certain number of years?
- Do you have a mortgage or other large expenses?
- Do you want to leave behind a financial legacy?
- Do you need money for your final expenses?
On average, 50 – 59-year-olds need $100,000 or more in life insurance, depending on the expenses. Most seniors could still get term life insurance at this age, which is a good option if your financial needs are temporary (10 – 15 years or less), but you can also apply for a permanent life insurance policy.
Life Insurance for Ages 60 – 69
At ages 60 – 69, you’re likely retired or close to it. Your expenses may have decreased by this point, so you may not need as much life insurance as you would between ages 50 – 59. If you’re already retired, you may not live on as much income as when you worked.
You’re still eligible for term life insurance at this age, but the premiums could get relatively high the older you get. I’d only recommend term life insurance if you need to cover a considerable expense, such as a mortgage. If you’re caught up on your debts and just need to cover your final costs or leave a little money for your beneficiaries, a final expense insurance policy can be a better option.
Consider a fully underwritten policy or simplified issue policy to keep your costs down. With some medical background on you, the premiums won’t be as high, but you’ll only get coverage of $10,000 – $25,000 or possibly up to $50,000, depending on the company.
Most people in this age bracket need $100,000 or less in life insurance and mostly want to cover any debts and their final expenses.
Life Insurance for Ages 70 – 79
Your life insurance options dwindle as you enter the age bracket of 70 – 79. While technically, you might be eligible for term life insurance until age 85, the premiums are usually unaffordable for most people.
At this age, you’re better off focusing on final expense policies. If you have health issues, a guaranteed-issue policy will guarantee coverage, but at a lower amount – usually up to $25,000.
Since you’re more than likely retired and are hopefully living off your retirement funds, your focus should be on your final expenses and how you’ll cover them for your loved ones, which is where a $25,000 – $35,000 final expense life insurance policy will help.
Life Insurance for Ages 80 – 89
At this age, you’ve officially entered the era where term life insurance isn’t an option. You’re left with permanent life insurance. You also likely have plenty of health issues, even if they’re just age-related, that will exclude you from underwritten life insurance.
Fortunately, final expense policies are usually available up until age 85. It’s important to assess your financial situation before then and get your insurance before you hit age 86 and may not have many options for life insurance.
At this point in your life, you’ll likely only need money for your funeral and burial. For many, a $10,000 policy is enough, or possibly up to $15,000.
Life Insurance for over 90 Years Old
If you’ve lived until 90, congratulations! The only downside is finding life insurance may be near impossible, even with guaranteed issue policies. This is because you’re very close to the end of your life in most cases, so the insurance company knows they’d have to pay out soon.
It’s best to get your insurance in line well before you hit this age so you don’t have to hunt down the rare company that will give you a policy at this age.
In a nutshell,
How much life insurance you need varies by your income, debts, and overall lifestyle. It also depends on who will still depend on your income/assets when you’re gone and how much money you have saved for this situation.
We’ve created a guideline for you according to your age. The table below will give you a basic idea of how much coverage you should buy at the bare minimum and your preferred life insurance policies.
| Age Range | Coverage Amount | Preferred Policies |
| 50-59 | $100k+ | Term |
| 60-69 | $50k-100k | Term, Simplified Issue, Final Expense |
| 70-79 | $25k-$35k | Guaranteed Issue, Final Expense |
| 80-89 | $10k-$15k | Funeral/Burial Insurance |
| 90+ | $10k | Final Expense |
Insurance Options
Each insurance company offers different coverage options, typically from $10,000 to $500,000. The type of coverage varies by the insurance company, with term life policies usually costing the least amount. This senior life insurance does not come with any savings and pays your heir only if you die before term expiration. Term insurance can be purchased with a rising or fixed premium.
Another option is permanent life or cash value. Like the previously mentioned policies, this insurance will pay your heirs should you die, but it is more costly because of its increasing value.
You can choose from variable life, universal life, and graded whole life. Before choosing a policy, consider your financial needs and plans for your loved ones. Most seniors choose a guaranteed no-waiting level-premium term life policy for its sufficient death benefits.
How Much to Purchase?
Your next decision is how much life insurance coverage to purchase. Many seniors only need enough insurance to cover burial expenses. However, if you are the breadwinner of the family or you want to leave a legacy, then more coverage may be needed
Consider each factor when purchasing life insurance for seniors. Review all your options, including the costs, to determine which option is best. Don’t wait until it’s too late or until the cost is unaffordable because of your age and/or health condition.
Factors That Affect Senior Life Insurance Premium
Many factors affect your insurance premiums, but understanding them ahead of time can help you minimize your costs.
Applying for senior term life insurance requires you to answer health-related questions covering various topics, including cholesterol, blood pressure, height, weight, and other metrics. Depending on the insurance company, an ECG or EKG may be required.
Besides age, other factors affect your premiums, including:
- Family medical history
- Lifestyle habits (smoking will increase your premium)
- Gender (older women generally pay a lower premium because statistics show they live longer)
Other Factors to Consider
Age and health are the primary driving factors in your premium costs, but other factors include:
- Driving Record
- Credit History
- Hobbies
- Lifestyle Choices & More
| Pros | Cons |
| Provides monetary benefits for your heirs when you die | Policyholders have to forego some of their expenses to pay for the premium |
| Offers superior tax treatment compared to other investments and financial instruments | Choosing a policy can be a complex decision |
| Your beneficiary usually doesn’t have to pay any taxes on the death benefits | A good deal of research is required to find the right policy (we can help you to make it hassle-free for you) |
| Cash value growth is tax-deferred | |
| Cash value withdrawals are usually handled in a first-in-first-out (FIFO) manner, so the withdrawals up to the premiums are generally tax-free | |
| Life insurance for older people is more flexible today |
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How to Find an Affordable Life Insurance?
Researching and comparing the packages is the most effective way to get a cost-effective life policy. As we’ve demonstrated, many policy options are available, and several factors affect the cost of the premium. You should consider your present situation and seek an insurance policy that meets your requirements.
When you’re looking for insurance, review the policy and ensure the terms fit your needs and that you understand them. Remember that the coverage varies according to the company and how they assessed your profile. Ask a company representative to explain if you have any questions about their policy.
Remember, you don’t have to apply at the first life insurance company you find. Insurance companies offer different plans and packages to suit different profiles and requirements. Shop around and compare your options.
FAQs:
Is there a Maximum Age for Senior Life Insurance?
Every life insurance company has a different maximum age they’ll allow for life insurance. There isn’t a universal age that seniors can or can’t get life insurance.
However, the average life insurance company allows seniors to buy life insurance up to age 85.
The most common option at this point is burial or final expense insurance. Term life insurance policies usually cut off at a much lower age, usually 70, but some go up to 80. The problem, however, is the premiums are much higher the older you get.
I have Trypanophobia; Can I get Life Insurance?
Fortunately, you have an alternative. Many insurance companies have no medical exam policy available. The premiums are higher on the policy, but you don’t have to go through the challenge of handling needles if you can’t.
Do I Get Life Insurance even with Pre-existing Health Issues?
Some pre-existing conditions can stop you from getting life insurance. It depends on what it is and the prognosis.
If it’s a condition that is terminal or will shorten your lifespan, you may not qualify for life insurance, or if you do, you’ll pay much higher premiums.
However, if you know certain medical conditions preventing you from securing life insurance, you can opt for a guaranteed life insurance policy. Anyone can qualify for a guaranteed issue policy because you don’t have to undergo a medical exam.
However, this type of coverage has a 2-year waiting period. If you die within two years of buying coverage, your loved ones will only receive back the premiums you paid plus a small percentage. They won’t get the full death benefit.
Can I Cancel and Get My Premiums Back from my Life Insurance?
Life insurance can feel like a gamble. You’re ‘betting’ on your chance of being alive at the end of the term. If you are alive (which is a good thing), you might feel like you wasted money on insurance premiums.
Unfortunately, canceling your policy doesn’t get your money back.
You also don’t get your money back if you outlive a policy. But there are a couple of workarounds:
Convert to a permanent life insurance policy – Most term policies can be converted to a permanent life insurance policy. Before you accept this option, read the fine print. Each insurance company allows a different period when you can convert. Some allow just a year or two, and others allow it until a specific age.
Buy a return of premium policy – You can also buy a return of a term life insurance policy. This guarantees you’ll receive your premiums back if you outlive the policy. However, the premiums on an ROP policy are much higher, so keep that in mind.
Get Life Insurance Quotes:
The quickest and most effective way to find senior citizen life insurance is to get quotes online. There are many options today, but which one really fits your needs? Calling each one is time-consuming, but the process will be much quicker and more convenient if you get quotes online since everything is just a click away.
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All the insurance quotes we offer are free and instant, plus most offer discounts. Our comprehensive database lets you easily compare them and determine which is correct. We also include detailed guides about life insurance plans.
It’s difficult to emphasize how important life insurance is for seniors, and finding the most appropriate plan is necessary.
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