Senior life insurance is an important decision for those entering or in their retirement years. In the event of your death, a life insurance policy can offer a financial safety net to take care of any final expenses or debt you may have remaining.
What types of life insurance should seniors consider?
There are several different types insurance that you can consider as a senior. Each serves a unique purpose, so whichever one you chose will depend on your personal circumstances and goals.
Term life insurance or permanent life insurance are the two most common categories of insurance. With term life, you may only be able to get a policy until a maximum age, like 85. When you pass, your beneficiaries will receive a lump sum payment if you die within the policy term. A permanent policy usually includes an investment component that could potentially be used to live off of in your retirement.
Disability insurance pays out a percentage of your salary, usually anywhere from 60% to 85% of your income, if you’re unable to work due to a debilitating injury or illness. The definition of disability may vary between insurers so it’s important to determine under what circumstances a benefit will be paid. It can usually be purchased by itself or bundled with a life insurance policy.
Critical illness insurance provides you with a lump sum benefit if you suffer a serious medical condition. This lump sum benefit can be used to ease your financial strain during an already stressful time. It may be especially useful for those entering their later years as they become more susceptible to medical events occurring. It can be purchased as a separate policy or bundled with a life insurance policy.
Funeral insurance. This form of financial protection is used for covering the costs associated with a funeral. Policies will generally allow applicants to take out between $5,000 and $25,000 in coverage.
Am I eligible for term or permanent life insurance?
If you’re younger than 70 years old, than the short answer is, yes. You may have to shop around, as different companies have different cutoff ages for their applicants. You may also have limited policy options, but it is definitely possible to get coverage at that age.
If you’re in your 70’s or 80’s it can still be possible to get life insurance coverage from some providers. While a policy with a big payout will be very costly at that point, you can still get relatively affordable coverage for end-of-life expenses. These policies are typically no-medical exam policies, like guaranteed issue, and typically don’t payout more than $50,000.
Other types of coverage, like disability insurance, will likely have a much lower applicant age cutoff, like 55 years old. These policies may only cover you until a certain age as well, like 65.
Is my pre-existing medical condition covered?
While many life insurers won’t cover pre-existing medical conditions (especially for seniors) there are some exceptions. These are a couple of ways insurers tend to treat your pre-existing condition:
Entirely exclude coverage for death caused by the pre-existing medical condition.
Provide you with full coverage for an additional premium.
How much does seniors life insurance cost?
The cost of life insurance will get more expensive as you get older. Compare sample monthly premiums for a single, non-smoking male issued a 20-year term life policy with a $250,000 benefit.
Age
Monthly premium
50
$71.00
55
$129.00
60
$231.00
65
$383.00
What factors affect the cost of a life insurance premium?
Life insurance premiums are calculated based on a number of different risk factors. An insurer will likely use the criteria below to determine the premium payable.
Age. Due to age related health risks in your senior years, premiums will be more expensive compared to people that apply when they are young.
Gender. Men typically pay more in premiums than women because statistics have shown men have a lower life expectancy.
Smoking status. If you’re a smoker you’ll usually pay much more in premiums than a non-smoker. For insurance purposes, to be viewed as a non-smoker you’ll need to have stopped smoking for anywhere from 12-24 months.
Medical history. If you have a number of pre-existing health conditions, your premiums may be higher. A standard risk means you are in generally good health, and can qualify for reasonable premiums, even if you have minor health issues such as high blood pressure or high cholesterol.
Family medical history. Your insurer may ask details about the medical conditions of your immediate family members. This may include heart disease, cancers, diabetes, mental disorders and so on.
Hobbies. Insurers may ask if you’re involved in any hobbies or activities that may increase the likelihood of a claim.
Occupation. The nature of your occupation may also lead to an increase in premiums if your insurer deems it high-risk.
How can I get cheap life insurance as a senior?
Life insurance gets more expensive the older you get. However, it’s possible to find affordable coverage if you keep some things in mind:
Pick the right level of coverage based on your existing financial obligations.
Take steps to improve your health. Giving up smoking may lead to a reduction in premiums in the future.
Look out for special offers and discounts the insurer may offer which can cut down on your premiums.
Consider getting the most basic coverage with a minimal payout. It can be just enough to cover relatively small expenses like the funeral.
What expenses can life insurance cover?
The benefit payment from a seniors life insurance benefit may be used for a number of remaining expenses. These may include:
Any outstanding mortgage and smaller personal debts.
Funeral costs.
Legal fees.
Taxes.
Ongoing living costs for your spouse and family.
As a legacy to pass on to family members or charity.
Life insurance vs critical illness or disability policies
A lump-sum payout from critical illness insurance or recurring payments from a disability policy could potentially be used for:
Modifications to your home. If you were to suffer an illness or injury, you may need to install ramps or safety features to aid your mobility.
In home assistance. You may also need to cover the costs to have someone visit you regularly in your home for health and personal assistance.
Ongoing medical needs. There are often ongoing costs associated with treatments for an illness or injury which can be costly.
Nursing home. If you’re unable to stay in your home, you may need to move to a nursing home which requires ongoing payments.
What life insurance features are good for seniors?
Some key features to consider when looking at seniors life insurance plans include:
Fixed premiums. You may select to pay the same premium in order to maintain a consistent budget.
Guaranteed insurability enables you to increase the level of coverage on your policy, if needed, without another round of medical underwriting.
Temporary life insurance will provide complimentary interim life coverage while application is being assessed by insurer.
Funeral advancement benefit. Will make an advance payment (like $20,000) to your nominated beneficiary to assist with funeral expenses.
Accelerated death benefit. If you become terminally ill, you can receive a payout while you’re still alive to assist with treating your condition.
Waiver of premium. If you become disabled or too ill to work, the premium will no longer have to be paid and the policy will remain in effect.
Loans and cash. Certain permanent life insurance options, like whole life and universal life, often have features that allow you to borrow or withdraw from the cash value of your policy.
Mortgage protection. This additional feature can be a policy add-on or purchased alone. It will pay the remaining amount of your mortgage after you pass.
How to compare seniors life insurance policies
Choose a reputable provider. Make sure you do your research into the company before you buy your policy. Look for details such as the company’s history, awards, customer service and claims process.
Do your research. Look at customer reviews and compare different plans and providers so you can boost your chances of getting the right policy. You may want to consider using a life insurance broker who can shop around for the best rate on your behalf.
Ask questions. If you have any questions or are uncertain about anything, bring it up. Ask about which policies you can choose from, costs, how to make payments, the claims process and anything else you want to know.
Don’t rush into anything. Take some time to think about your choice before you make any commitment. Seek advice from professionals or even family members so they can look over the policy and provider you’re considering. You can also look for polices with a 30-day buyback period that lets you cancel your policy within a month.
Benefits and drawbacks of life insurance for seniors
Taking out a life insurance policy can seem like just another time on your to-do list when all you want to do is relax and enjoy planning your retirement. However, there are some important benefits and drawbacks you should consider when looking at seniors life insurance.
Benefits of life insurance
Protect your savings. If you’re still working you don’t want to let an injury or illness force you to start living off your retirement savings earlier than expected. Having adequate coverage would protect you in that case.
Cover your final expenses. Your funeral has probably never been at the top of your savings goals. Seniors life insurance can include funeral insurance, which can really help relieve some of the strain on your family during that difficult time.
Avoid inheritance taxes. If you have significant assets and savings you’ll want to make sure the money gets to the right people. You can structure the benefit payout so that it’s received tax free by your heirs.
Drawbacks of life insurance
The cost. If you are just now taking out life insurance as a senior citizen, your premiums will be quite high, which may be too expensive if you’re on a fixed income.
Coverage can have an expiration. Your policy could be due to expire soon depending on how old you are. Always check with providers to see who can keep you insured the longest.
Pre-existing medical conditions excluded. Pre-existing medical conditions will typically be excluded on most policies, or they might come with a higher premium and include heavy restrictions.
Frequently asked questions about seniors life insurance
Even if you’re healthy you’re not immune to accidents and no one knows what the future has in store. Therefore, it’s best to take out life insurance as early as possible, when you are less of a risk to the insurer and your premiums will be lower.
That varies by provider, however, many policies will have fixed premiums, so you can count on paying the same monthly amount as long as your policy is active.
Once you apply, the underwriting process — to determine how much of a risk you are — can take anywhere from a few days to up to two months.
Funeral insurance may be the only option for those who haven’t taken out life insurance in the past and don’t need a significant amount of coverage. Most funeral insurance allows applicants to take out a policy between $5,000 and $25,000. But it may have more limited coverage, with payouts for funeral and related burial expenses only.
If you’re wondering if funeral insurance is worth the price, consider your family’s financial position. Since money from your estate probably won’t be processed and freed up by the time of your funeral, your family will have to pay for it. Funeral insurance can help relieve some of their stress during that emotionally challenging time.
Katia Iervasi is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in insurance. Her writing and analysis on life, disability and health insurance has been featured in The Washington Post, Forbes, Yahoo, Entrepreneur, Best Company and FT Advisor. She holds a BA in communication from Australia's Griffith University. See full bio
Chelsey Hurst is an associate editor at Finder. She loves empowering people to avoid financial pitfalls and make better decisions with their money. Chelsey has a Bachelor of Science from Redeemer University, a Master of Science from McMaster University, and has won multiple awards for research communication. In her spare time, Chelsey enjoys cooking and taking long walks in nature. See full bio
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