Life Insurance

Best Life Insurance Options for Seniors

When purchasing life insurance as a senior, age, health, and the number of financial dependents you have play a factor in finding the best life insurance option for you.

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Having a life insurance policy in place may provide security and relieve any financial burdens that your loved ones may experience when handling your final expenses. 

When purchasing life insurance as a senior, life insurance rates may be higher compared to rates for young adults. Furthermore, as a senior, you may hold different financial priorities that could affect how much death benefit you’d like to apply for. 

Differences in age, health and the number of financial dependents you have could make finding the best life insurance options for seniors different than for the general population.

Life Insurance Eligibility and Costs for Seniors 

Life insurance rates and eligibility are determined at the time of policy purchase. Bear in mind that for seniors looking to purchase a policy, rates could be more expensive due to an increased risk profile, which are factors that could affect your rates, such as age, health, and the drug prescriptions you take. 

Aside from having an increased risk profile, seniors with pre-existing health conditions may find it more difficult to get a life insurance policy. Examples of pre-existing conditions include: 

  • Asthma
  • Diabetes
  • Epilepsy
  • Cancer

Pre-existing conditions may cause the policyholder an unexpected or early death, which increases the risk for insurance companies. To hold up the risk, insurance companies could deny you coverage. 

Life Insurance Needs for Seniors

One of the biggest factors when determining the death benefit for your life insurance policy is financial dependents. Financial dependents are those that rely on your support financially, such as your spouse and/or children. 

Young adults may choose a bigger death benefit to help financially support their family if anything were to happen to them. In most cases, their children are under 18 years old and may not be able to support themselves.

As a senior, your children may be able to support themselves on their own. This factor could lessen the need for a bigger death benefit and lead to a death benefit that simply covers your final expenses and other debts if you have any. 

The need for permanent or whole life insurance may not be as important as it would be to a young adult. Permanent life insurance may be more costly due to the longevity of the policy, in which it never expires. However, permanent life insurance could be hard to qualify for, as insurance companies could require a nurse’s exam, blood and urine samples, medical records, and your age is a determining factor as well. With the high cost of the policy and the extra steps to get qualified for a permanent life policy, some seniors may opt for other forms of life insurance. 

Life Insurance Options for Seniors 

There are different life insurance options that may best suit your needs, such as a final expense life policy or a term life policy. Depending on the policy, some may require medical exams and some may not. 

CostMedical examDeath benefit
Final expense life insuranceLower than other types of permanent life policiesFor most insurers, no exam neededYes; enough to cover burial and funeral expenses
Whole life insuranceLower than a universal life insurance policyYesYes; policyholder sets the amount
Guaranteed issue life insuranceMore expensive than term and whole life policiesNoYes; has a waiting period to receive 100% of the death benefit
Universal life insuranceMost expensive type of life insurance policyYesYes; policyholder sets  the amount
Guaranteed universal life insuranceHigher than a term life policy, but lower than a whole life policyNoYes; Death benefit is guaranteed if the premiums are paid on time
Term life insuranceTypically lower than permanent life policiesYesOnly if the insured dies before the term ends

Final Expense Life Insurance, or Burial Insurance 

A final expense policy, also known as burial insurance, is a type of life insurance designated for funeral and burial expenses. If you have any pre-existing conditions, final expense insurance may be a good alternative as it doesn’t require a medical exam. 

The cost of a final expense policy is lower than other types of life insurance because the goal of its death benefit is to provide coverage for a funeral. In the case that you pass, there may not be enough money to offer financial support for your surviving beneficiaries or to pay off any remaining debt that you may have. 

Policyholders who have severe health issues may have a two-to-three year waiting period imposed on them. If you die within this waiting period, your beneficiaries may not be able to receive 100% of your death benefit. Instead, your beneficiaries may receive the return of payments that were made and interest gained on your policy.

Whole Life Insurance 

Whole life insurance provides lifelong coverage and remains active while you’re alive. This type of policy differs from final expense life insurance because you’re able to set how much death benefit you’d like. Whole life policies may be a good option for seniors as it provides a much more substantial death benefit that could help pay off debt.

Whole life policies may have a cut-off age for seniors. Depending on the insurance company, the cut-off age for applicants is often 80-to-85 years old. Bear in mind that the older you are, the more expensive your life insurance premiums may be.

Guaranteed Issue Life Insurance 

Guaranteed issue life insurance provides insurance for seniors who may not be able to get life insurance elsewhere. Differing from whole life insurance, this type of policy skips health questions and does not require a medical exam. 

A downside of a guaranteed issue life policy is its graded death benefits. Much like the final expense waiting period, if you pass within two-to-three years of having your policy, your beneficiaries may only receive the return of premiums plus interest on your policy. The only occasion where your beneficiaries may receive all of the death benefits is if you were to pass in an accident. 

Universal Life Insurance 

Universal life insurance provides lifelong coverage to the policyholder. Unlike whole life insurance where the premiums and the death benefit stay level, you may change your death benefit and premiums at any time. This policy may be a good option for seniors who would like to leave an inheritance behind for their loved ones. 

A downside is that it may be harder to qualify for a universal life policy, as the insurance company may request medical records, a nurse’s exam, and a blood or urine sample. Furthermore, because the policy has a cash value feature attached to the policy, universal life insurance may be the most expensive policy for seniors.

Guaranteed Universal Life Insurance

A guaranteed universal life policy is a hybrid between standard whole life insurance and term life insurance. The coverage offers term rates and provides permanent coverage to policyholders. Unlike a standard universal life insurance policy that offers cash value growth, the guaranteed universal life insurance policy does not. 

The guaranteed universal life insurance policy may be beneficial for seniors with poor health, as coverage is guaranteed. However, there is no flexibility in decreasing or increasing your premiums, unlike a standard universal life policy. If you miss a premium, you may risk losing your guaranteed universal life policy overall. 

Term Life Insurance 

Term life insurance may cover you for a set amount of time with a locked-in premium and death benefit that does not go up or down. Unlike whole life insurance, a term life policy expires after a set number of years. 

Term life insurance may be a good option for seniors as they tend to be less expensive than permanent policies. The reason it’s less expensive is that it only covers the policyholder for 5-to-30 years and has no cash value. 

It’s important to keep in mind that as a senior, the longest term that you may be covered for is 10 years. Your beneficiaries may only receive the death benefit if you pass within those 10 years. If you outlive the term, you may have to renew your term policy. However, you may not be eligible for term life insurance anymore, as the age limit to renew is 85 years old. 

Saving Money on Life Insurance as a Senior

While life insurance policies for seniors tend to be more expensive than for younger adults, there may still be ways to lower insurance rates, such as:

  • Don’t use tobacco. A tobacco user may end up paying more for their premiums than a non-tobacco user. If the insurance company finds out that you’re a tobacco user and you’re caught lying on your life insurance application, your entire policy could get canceled. 
  • Get routine health care. Having scheduled routine health care such as screenings, check-ups, and health consultations with your doctor could keep you from getting sick. The better your health, the lower your insurance rates could be. 
  • Eat and exercise to improve overall health. Not only does routine health care keep you from getting sick, but exercise and a healthy diet could improve your health as well. Maintaining a good diet and exercise could help avoid any medical issues that may come up in the future.
  • Maintain an active, social lifestyle. For seniors, social activities are important and have a positive impact on emotional and mental health. If your mental and emotional health is in a low state, it could affect your physical health as well. Moreover, social isolation may contribute to certain age-related conditions, such as dementia, which could affect your insurance rates. 
  • Compare life insurance quotes. Different insurance companies may offer different life insurance quotes. It’s important to shop around to see which policy and company are in your budget. It’s recommended to see if you’re eligible for a standard whole or universal life policy before exploring guaranteed issue policies, as guaranteed issue policies are more costly.