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.
Senior life insurance is an important decision for those entering or in their retirement years. It could be worth reviewing your current policy … doing so could literally save you hundreds each year.
This guide will discuss the different types of insurance worth considering for seniors and offer guidance on how to compare different policies available.
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What types of life insurance are available to seniors?
Life insurance. Life insurance for seniors comes in the form of term life insurance or permanent life insurance. However with term life, you may only be able to get a policy until the age of 80. When you pass, your nominated beneficiaries will receive a lump sum payment if you die within the policy term.
Disability insurance. Provides a lump sum benefit for permanent or partial disability. The definition of disability may vary between insurers so it’s important to determine when a benefit will be paid. The payout may be used to cover everyday living expenses and costs associated with rehabilitation. It can be purchased by itself or bundled with a life insurance policy.
Critical illness insurance. Provides a lump sum benefit if the insured suffers from a medical condition specified in their policy. This 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 the life cover policy.
Funeral insurance. This form of financial protection is used for covering the costs associated with a funeral. Most policies will allow applicants to take out between $5,000 and $20,000 in coverage.
Am I eligible for life insurance?
The maximum age that seniors can apply for coverage will really depend on the type of policy that they decide to go with. This may vary between providers but generally the following rules apply.
Life insurance. Life insurance can be taken out until age 90 with some coverage remaining in place until age 121.
Critical illness insurance. Coverage for critical illness will vary between insurers, but typically have a cutoff age of 65.
Disability insurance. You’ll likely be ineligible after 60 years old and the policy generally lasts until your enter retirement.
Funeral insurance. Typically you can’t be older than 85 years old and the policy will remain in place until you are 100.
How much does seniors life insurance cost?
The cost of life insurance will get more expensive as you get older. Here’s an example of monthly premiums for a 20 year term life policy with a $250,000 benefit.
Age
Monthly premium for a non-smoker
Monthly premium for a smoker
50
$76.58
$233.21
55
$121.28
$372.47
60
$207.70
$555.73
65
$347.67
$988.32
What factors influence the cost of a life insurance premium?
Life insurance premiums are calculated based on different risk factors a person is exposed to. An insurer will 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 two to three times 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 12 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 a lower premium, 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.
Is it possible to find cheap life insurance as a senior?
Life insurance gets more expensive the older you get. However, some key steps to find affordable coverage include:
Take the time to research what policy is actually suitable for your needs.
Determine an adequate 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 offered by the insurer to cut your premium.
Consider how your premium is structured and paid to reduce the overall amount.
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 the common ways insurers may treat your pre-existing condition:
Exclude the pre-existing medical condition entirely.
Offer a policy with restrictions on the condition, for example, only paying out a partial benefit.
Provide you with full coverage for an additional premium.
What expenses can life insurance cover?
The benefit payment from a seniors life insurance benefit may be used for a number of remaining expenses. This may include:
Any outstanding mortgage and smaller personal debts
Funeral costs
Legal fees
Taxes
Ongoing living costs of your family
Deliver a legacy to pass on to family members or charity
A benefit from a critical illness or disability policy may be used for:
Modifications to your home. As you get older or you 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 reasons — or you may need to employ someone full time.
Ongoing medical needs. Even if you suffer an illness or injury, there are often ongoing costs associated with these treatments 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 has ongoing expenses.
What should you look for in a seniors life insurance policy?
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 proper budget.
Guaranteed insurability. Enables you to increase the level of coverage on your policy without another round of medical underwriting
Interim coverage. Will provide complimentary interim life coverage while application is being assessed by insurer.
Funeral advancement benefit. Will make an advance payment (usually to a maximum of about $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 becomes 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 withdrawals. Whole and universal life polices often have features that allow you to borrow or withdraw from the cash value of your policy.
Mortgage protection. This additional feature can be found in term life policies and will pay the remaining amount of your mortgage.
Financial planning benefit. Will provide an advance payment to cover any legal or estate planning costs.
Benefits and drawbacks of life insurance for seniors
Taking out a life insurance policy can seem like just another thing to organize 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 this 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 pays out a benefit for funeral and burial expenses.
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 can be 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 conditions will typically be excluded on most policies, come with a higher premium or include heavy restrictions.
Should you get funeral insurance?
Funeral insurance may be the only option for those that’ve been unsuccessful in taking 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 $20,000.
Tips to help when shopping for a life insurance policy
Make sure you use 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, read about the provider if you are not familiar and compare different plans and providers so you can boost your chances of getting a good deal.
Ask questions. If you have any questions or are uncertain about anything, be sure to bring it up. Ask about the plan itself, the provider, its background, its policies and anything else you need 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.
Premium payment options. Find out whether your policy includes flexible repayment options.
Frequently asked questions
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.
Varies by provider, however, most policies will have fixed premiums, so you won’t have to pay any more as you get older.
Once you apply, the underwriting process — to determine how much of a risk you are — can take anywhere from two to four weeks or up to two months if you’re required to have an attending physician statement.
Richard Laycock is Finder's insurance editor and has been wrangling insurance product disclosure statements for over five years. His musings on insurance can be found across the web including on MoneyMag, Yahoo Finance and Travel Weekly. When he’s not helping people make sense of insurance fine print, he is testing the quality of cocktails in his newfound home of New York. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance.
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