With 280,000+ active life insurance policies in the US, the importance of signing up has become apparent.
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However, term life policy tends to win out.
This leads one to ask, “What is term life insurance?” and this article will have all the answers.
Table of Content
Defining Term Life Insurance
Let’s start with the basics.
Term life insurance includes a pre-determined coverage period. Premiums are paid based on the decided term, and the policyholder can renew his/her coverage if it runs out before death. This provides the policyholder with sufficient flexibility while deciding how to position their coverage.
Now, let’s move onto the key features of term insurance policy.
- Selection of Terms (usually 5, 10, 15, 20 years)
- Minimum and Maximum Amounts For Coverage
- Policy Is Renewable After Completion Of Term (If Desired)
- Guaranteed Premiums Upon Signing
These are the “staple” features within a term life insurance policy. Various agencies will add extra benefits ranging from lump sums, survivor benefits, partner protection, and more. All of this should be discussed with the company beforehand.
Term Life Insurance Rates for Seniors
All rates provided below are accumulated based on monthly premiums for a $1,000,000 policy.
- Age 60: $214.00
- Age 65: $ 373.00
- Age 70: $609.00
- Age 75: $1,241.00
- Age 80: $2,604.00
- Age 85: $3,000+
- Age 90: $3,500+
These figures might seem crazy at first look because we have considered a $1M policy which is usually a very high value.
Note: These are estimated figures. No one can give you an accurate number unless you request quotes. To find the lowest price and compare rate online, click here.
Advantages of Term Insurance – must read
What are the benefits of term coverage? With the industry now ranging near the 5 trillion (USD) mark, it continues to gain steam, and this is a valuable option for seniors.
Before looking at the best term life insurance rates for seniors, it’s essential to consider all advantages.
The plan provides incredible flexibility to seniors.
It starts with the range of terms (i.e. 5, 10, 15, 20 years) and progresses towards different features and premiums.
If a person doesn’t require their life insurance policy after the term finishes, they are well within their rights to move forward without penalization. There are certain policies that return the premium as well.
This provides comfort to the policyholder and unshackles them.
It involves affordability.
However, the average plan is costly, and this can lead to hard-hitting premiums a person can’t afford. With term life insurance, it’s easier to pay the premiums because they’re lower than any other option. This provides leeway to a person who wants to budget for the short-term as well.
While seeking cheap term life insurance for the elderly, the affordability of these policies does stand out as a key benefit.
Interestingly, 50% of all life insurance holders believe their coverage isn’t enough. The reason involves not having all of the key features they’re looking for.
With term policy, it’s predictable, and all the key features are present.
This eliminates all doubt a person might have while making a selection. Finding inexpensive term life insurance rates for seniors is only possible because this is a likely option.
The simplicity of term life insurance is one of its primary benefits. The plan is laid out based on a set term, and all premiums remain as determined.
It removes all doubts from the process.
The life insurance policy will remain static until its coverage term runs out enabling a person to cultivate an appropriate plan as deemed necessary.
Disadvantages – don’t overlook
1) Death Is The Only Way To Collect
It sounds dire, but that’s the truth with term life insurance policies. The holder has to die within the established coverage period.
If they don’t, the policy can be renewed, but the life insurance starts again.
This means beneficiaries only get the amount set for one’s policy if death occurs. Since 40% of all American families believe they’d face financial difficulty if the primary wage earner died, this can become a short-term safety net and nothing more.
So, it has its advantages, but this can be a disadvantage too.
Term life insurance policies come with a “minimum” and “maximum” amount as determined by both parties based on variables such as age, health, and personal finances.
This can be restrictive in certain cases especially when hoping to gain a higher maximum.
How To Find A Cheap Term Life Policy?
To find low-cost term life coverage for the elderly, the goal should be to compare multiple insurance companies to see what they’re offering. Each insurance company will vary, and these requirements require assessment before making a decision.
Moreover, this research should also include whether medical exams are required or not. To find term life insurance, no medical exam for seniors should be an expectation. But it comes with a drawback when you are looking for a term policy without medical exam as you will be proposed a guaranteed acceptance life insurance which is one of the most expensive plans out in the market.
Don’t settle for less.
Finally, an affordable term life insurance for elderly parents doesn’t come out of thin air. It requires due diligence and a good understanding of all key features.
This is how one can go about finding cheap term life insurance for seniors and come out with the best possible policy.
Frequently Asked Questions (FAQs)
- What are the Differences Between Convertible and Renewable Term Insurance?
Convertible: This policy means that you can switch from a term to whole life insurance. There are significant differences between term and whole, most notably in that you can earn interest from premium payments and the policy may have no set end date until you cash it out.
A convertible policy benefits younger people who want to save up for retirement. Keep in mind that you can adjust the benefit levels when you make the change.
Renewable: Here, you can renew your term policy for another 10, 20, or 30 years depending on your age and the company from which you purchased the life insurance. You can change the benefit level, but there also may be changes to the premium depending on several factors.
You should purchase a renewable policy if you are approaching your senior years and need to change your coverage due to different financial circumstances.
- Can You Extend a Term Life Insurance Policy?
If the policy is renewable, then yes it can be extended although there may be additional terms that are added depending on your age, gender, and any notable changes which affect the risk factors involved in setting the premiums.
For example, if you renew a 10-year term policy at the age of 55 and you have not had any serious health or lifestyle events, the changes to your policy will be minimal.
However, if you renew at 65, you might see your rates go significantly upward even if there have been no changes. Check with your insurance company to see about expected changes when you renew.
- What Happens When Your Term Life Insurance Expires?
Two things happen when your term insurance expires assuming you do not let it go. Either you purchase a new policy or renew your old one. If you have convertible insurance, you can change it to a whole life insurance policy that is of equal value.
So, depending on whether you have purchased convertible or renewable, there are some options that you can explore when your term insurance expires.
- What Happens to Term Life Policy When You Outlive Its Expiration?
When you approach the end of the term insurance policy, you will need to decide what to do next. Of course, you can always let the policy go and not get a new one, but that is not recommended because the older you get, the more you have a need for life insurance.
Buy New Policy: Many people purchase new policies that better reflect their current living conditions. When the kids move out, or you pay off your mortgage, you can lower the benefit levels.
Convert: If you have a convertible policy, you can change it from term to whole of the same value if you desire. This lets you save money and earn interest with your life insurance policy.
Renew: If you have a renewable policy, you can extend what you have with a few changes depending on your age, gender, health, and lifestyle. You have some flexibility in changing the benefit and premium levels with this policy.