Buying a life insurance policy at an older age, or as a senior, can get more expensive and trickier, since we become a higher risk and the payout also becomes more likely. It is, however, an essential investment even for people who are older than sixty years of age, since your needs and your financial goals will be changing. This is why you need to reevaluate your financial situation and existing policies to ensure that you are adequately covered for the future. There are plenty of insurance policy options to choose from, even at an older age, and all of them are best at something. You have to select the one that suits your needs and requirements.
Best Options of Life Insurance for Seniors
Overall, the best option for seniors, when it comes to life insurance policies, is to opt for either Guaranteed Universal Life or Term Life Insurance policies, because in these you can add riders, choose the payout amount you require. They are far more affordable, can be helpful for you till the time you are alive, and also have guaranteed death benefits.
Term Life Insurance
This type of insurance provides the maximum coverage at quite a low price, which is especially true if you are healthy (the healthier you are, the less expensive it is). It is able to provide insurance coverage for a specific number of years. While many companies do not offer thirty-year insurance plans after the age of fifty to fifty-five, there is a possibility to get a twenty-year plan till the age of sixty to sixty-five, and the seniors who are in their seventies can only purchase the policy for up to ten years. After that, there are short term plans that are available in order to extend the period of coverage for about one to five years, which also means more expensive premiums every time the policy is continued.
- The lost wages can be replaced in case the earner dies first.
- The debt or mortgage costs can be recovered if the spouse dies prematurely.
- The insurance premiums are less expensive, especially before the age of seventy-five.
- Bank loans can be secured.
- It can also be converted to permanent insurance if required.
- It is protected from divorce decrees.
- Riders can be added to the policy, which is helpful in case you are critically, chronically, or terminally ill, and they act as living benefits.
- There is no cash value accumulation. There is only a death benefit amount through your premium payments.
- There is an end date to the policy, which means you can outlive the policy. It can be renewed up to the age of ninety to ninety-five, but it becomes costly with a shorter time period.
Guaranteed Universal Life
This is a type of permanent life insurance, and there are some guarantees in this plan. The majority of the guarantees are quite positive, especially for the seniors. The premiums remain the same throughout this policy, which is excellent in terms of budgeting. It is also considered as a safer policy since it is not dependent on financial market fluctuations. The premiums are defined and set without any increase in the premiums.
Moreover, the premiums can be set for a long time, even until the remaining lifetime, and can go up to the age of a hundred and five! There is also a guaranteed death benefit, which is regardless of how long you live. You can select the age of maturity for this policy as well.
The seniors can select the high option for age to reduce the risk of outliving the policy since that would be something most people would want to avoid (to survive the plan). Outliving the policy would mean you would need to purchase another policy with a higher premium. There is also a payment schedule that is given which has to be paid on time, or else the premiums would be compromised. The cash value, however, may be limited or may not be there at all. The lower premiums, however, are a trade-off.
- The premiums cannot increase while the insurance policy is still intact.
- There is a guaranteed death benefit amount of payment.
- There is a possibility of eliminating the risk of outliving the policy by setting the age option to one-twenty years.
- There are options for death benefits from $25,000 to $10 million and more.
- It can be purchased till the age of eighty-five, provided you take a physical exam, which includes urine and blood test. For those who do not want to go through the physical examination can only issue it till the age of eighty.
- Riders can be added to the policy that allows the insured person to use a sum of their death benefit in case of a critical illness to cover the medical costs.
- There is no accumulation of cash value, and the premiums are only for the death benefit payout.
- There is a payment schedule that has penalties in case of late payments.
Best Options of Life Insurance for Senior Citizens
What the best options are for the seniors or people above the age of sixty, mostly depends upon their circumstances. It depends on what their health is like, their life insurance needs, and their overall financial situation.
For the applicants who are over the age of sixty, there are some eligibility restrictions for buying life insurance. Since all life insurance policies may not work for you, it is thus essential to consider whether you want life insurance for the short term or the long term.
Reasons Why Seniors Need Life Insurance
The reasons why you are opting to get the life insurance policy in the first place can also help you decide which one is the best for you. Some of the common reasons why senior citizens require life insurance policy coverage are:
- For their debt coverage.
- To leave enough behind in order to cover their outstanding debts, like a mortgage.
- You may still be employed and have dependents.
- The dependents can be provided for, in case of your death.
- To leave behind money for their heirs or for charity.
- To leave behind a large number of death benefits as a form of a legacy for a particular charity or your loved ones.
- To take care of your funeral expenses.
It is crucial to decide what death benefits you would want when you are going for insurance coverage. For a lot of people, a high amount of death benefits is not required, as long as there is enough for funeral coverage and an outstanding loan. The time frame of the policy should also be considered. If you only require a short-term policy, a term life insurance may be a good option that provides appropriate coverage and is affordable as well. Moreover, if you are in good health, you may want to have a longer policy duration that has consistent payments. In such a case, the guaranteed universal life may be a better option for you.
How To Determine Which Policy Is The Right One For You?
There are various life insurance policies available that are better for different situations. The reason why you should buy one particular type of life insurance policy depends on why you are getting the policy in the first place.
To have enough money to pay off your outstanding debts
One of the primary reasons why seniors would be interested in buying a life insurance policy even during the later years in their life is to pay off their debts. The term life insurance is a good option when you are expecting that your debts will be paid off as the policy expires. For example, if ten years are remaining in your mortgage plan, you can buy a ten-year term policy so that you can be assured that the mortgage will be paid off even if you die.
You are working and have dependents
In such a case, guaranteed universal life policy and the term policy are both excellent choices, because whole life insurance would be costly for you. You should, however, know precisely when your policy will expire, since a term policy can lapse even during your lifetime, and that would leave your dependents with nothing. In such a scenario, the guaranteed life policy is a better option.
Guaranteed life insurance is also a good option if you have an elderly parent who is dependent on you; in this case, you can also take the life insurance policy for the expected duration of their lifetime.
To leave behind a legacy for your heirs or charity
In this case, it would make sense to get a permanent policy that can last for the remainder of your life and would payout when you pass away, no matter how old you are. In this case, even though the whole life insurance can work, the guaranteed universal life is a better choice, since it goes up to the age of ninety, ninety-five, hundred, and even hundred and twenty-one! Moreover, the premiums in this policy are also much lower and, hence, more affordable. The death benefits available in this policy are for fifty thousand to ten million dollars and more, which makes it the right choice especially if you have final expenses.
Other Options Worth Considering
Getting living benefit riders or long term care
You can add specific riders to your policy, which can also be helpful for the purpose you are buying the policy for. You can add living benefits or long term care rider, through which you can have access to your death benefit while you are still alive, and this can cover you in case you need money for certain emergencies or some long term care. This means, however, that the amount would be deducted from your total death benefit amount, and your beneficiaries would end up receiving less.
Get a convertible term policy
You may want the life insurance policy only for a decade, and if you are unsure how long you want it for, you can consider getting a term life insurance policy that has an option where you can convert it to a permanent one later on in life. This way, you would not have to go through a medical and physical examination later on.
How Do Age and Health Affect Life Insurance Policies for Seniors
Age and health affect the life insurance options for everyone, and seniors have to go through additional limitations. This is because, as you get older, the insurance policies that are available to you are of shorter durations, and have more expensive premiums. Moreover, majority of the insurance policies require a medical test to determine whether you would be approved for the policy, and what your premiums will be. The seniors have to go through a medical exam, complete a health-related questionnaire, and have to permit the insurance company to access your medical records.
The options for life insurance gets limited as your age
Many insurance providers do not offer thirty-year policies to people over the age of fifty or fifty-five, and many others do not provide twenty-year plans to people over the age of sixty to sixty-five. If you have hit your seventies, you would only be limited to ten or a fifteen-year plan. Each year that you wait and do not buy a life insurance policy, your options decrease, and the premiums that you would have to pay, increase.
Health also affects the premiums
One of the significant factors that affect the class the insurers would assign you is your health, which eventually affects your premiums. For example, if you are overweight by ten to fifteen pounds, you would not be classified in the least expensive or the best rate class. Most of the people who are over the age of fifty-five are hardly ever in good health, and many are taking certain medications for either cholesterol or blood pressure, while many others have diabetes. All these affect the rate of premiums that would be assigned to them.
The Bottom Line
There is no one particular life insurance policy that is best for senior citizens. The best life insurance policy for you depends on why you need a life insurance policy in the first place. It also depends on your current health, and on your financial conditions. Moreover, it also depends upon which insurance provider is giving you the best option, and at what rates. This is why you must know what options you have in terms of policies, and how these change with your age. It is, thus, crucial that you do your research, and get rates and quotes from different life insurance providers before you commit to a single insurance policy.