Life Insurance for Seniors: Everything You Need to Know (Companies + Rates)
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UPDATED: Apr 12, 2022
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Exactly when a person becomes a senior is debatable. Most of us can probably agree that it’s a state of mind and lifestyle, not an actual age group. The popular “60 is the new 40” mantra has a lot of truth to it.
People are living longer, healthier lifestyles than their parents. Life insurance has been adapting to these changes, offering more options for just about every senior’s lifestyle and financial status.
We’ll help you sift through the vocabulary and what you should be considering. You can also use our tool to get a FREE online quote tool above when you decide what kind of senior life insurance is right for you.
What is life insurance for seniors?
Typically, the life insurance industry markets senior life insurance to people ages 50 and older. However, there are companies that qualify senior life insurance as specialized products for the age group of 70 and older.
It’s a tricky and subjective distinction. One size definitely does not fit all when it comes to purchasing life insurance.
For example, membership in AARP can begin at age 50, but many of its benefits aren’t actually available until age 55. And although its name sounds like their membership is retired, their own website hosts an enormous employment bank.
Look around: there are still plenty of seniors working, either by choice or because they still need the income.
People just aren’t sitting back and waiting for monthly pension checks anymore.
Becoming familiar with terms you’ll find in your search will help make it simpler. Even if you aren’t yet in the market for some of the products best for seniors, you can understand your options. Here are some key terms:
- Guaranteed issue – Also called guaranteed acceptance, it’s often recommended to seniors because the policy requires no medical underwriting
- Simplified issue – Similar to the guaranteed issue, but it uses a medical questionnaire instead of a medical exam to determine rates
- Death benefit – The amount of life insurance money a beneficiary of a life insurance policy will receive when the insured person dies
- Graded premium – An agreement in a policy that pays a lower benefit if death occurs within the first few years of a policy’s start date
- Level premium – Payout of benefits occurs regardless of the time of the policyholder’s death
- Waiting period – A specific period of time after a policy is bought before a death benefit is paid (usually two to three years)
How do life insurance needs change as you get older?
Many people choose to decrease the value of their life insurance policies as they become older. Survivors tend to depend on you less, and personal debt usually decreases as you age. Most people think life insurance is too expensive, so they don’t buy additional coverage.
The life insurance you bought that made sense in the early years may not be the best option as you get older, since older people may at any point face unexpected expenses.
Therefore, the best approach to life insurance is to examine your financial situation every two to three years.
You also need to take a look at being able to cover new debt or medical expenses.
Major life changes can occur just as rapidly in advanced age as they seemed to in younger years. Life insurance purchases in earlier years are typically made in occurrence with events such as marriage, the birth of children, or buying a new house. These are all major expenses for families that must be protected.
If you’ve been able to get through these expenses, consider them accomplishments. Then let’s open up a new checklist.
Milestones in your mature years can occur in unexpected ways. People transitioning from work into a new phase are often surprised by how much effort (and money) it takes to do less.
Why Seniors Need Life Insurance
Seniors can suddenly become empty nesters, sell or buy a house, or experience retirement or loss of a job. Without warning, that crutch of life insurance that seemed like a good adequate 20 or 30 years ago may not feel so reassuring now.
No one wants to leave their spouse or children in any kind of debt, furthering their emotional pain of loss. Here’s what life insurance can accomplish and cover:
- Funeral and burial expenses, which can average over $8,000 before other expenses such as memorial services and final resting markers
- Paying off debt, including loans for automobiles, credit cards and major home expenses
- Providing a legacy for family endeavors (such as a college education) or a charitable cause
- Providing for other final expenses of estate taxes and other legal fees
- Tax-free wealth transfer, including property assets you don’t want the IRS to claim
- Leaving money to a favorite charity, tax-free
Without warning, that crutch of life insurance that seemed adequate 20 or 30 years ago may not feel so reassuring.
Or, if you’re fortunate enough to be financially comfortable in senior years, you may not need the additional expense of life insurance. What fits at age 50 may be far different 10 years later.
Do you still need life insurance?
Whether you’re in your 50s or your 90s, there is no right answer when it comes to that question. Life insurance, after all, is all about income protection.
Did your investment portfolio perform well over your working years? Here are some important factors to consider.
Are you still employed?
If you, your spouse, or your partner are still employed, you should analyze cash flow and lifestyle expectations that would change in the event of either’s death. Try to determine how your existing lifestyle would still be affordable without the additional income.
Here’s a look at why people some people are choosing to continue to work after reaching retirement age, while others feel they have made a better choice by stopping their employment
Your life insurance death benefit should be able to replace at least one income, with a reserve for expenses you can expect in future years. There are plenty of online calculators available to help you determine this, but they may be designed to sell you something and could steer you into buying a policy that doesn’t fit your needs.
Whether you’re still employed affects your eligibility to receive Social Security benefits. If you’re still working, you’re continuing to build additional income to your retirement or savings.
If you’re no longer working, consider that the reserve held by the Social Security Administration is based on your working history. It stops growing in value or future benefit payments to your survivors.
If your death occurs while you’re still employed, a survivor benefit from Social Security has some surprising restrictions. This is important information for widows and widowers, whether they work or not.
Your age at death affects monthly income for survivors for the remainder of their lives.
Reduced survivors’ Social Security benefits are based on the total amount you were paid during your lifetime. Payments could be in effect as early as the survivor’s age of 60, but full benefits aren’t available to that person until much later, when they achieve retirement age.
Social Security survivor benefits might provide comfortable living standards for an older person — especially if the deceased made decent earnings over many decades of working. But Social Security payments should always serve as additional income, not a substitute for life insurance.
The early death of a spouse may be devastating to someone who has not yet reached their own retirement age (at least how the government defines it).
If you’re widowed and in your 50s, for example, this abrupt loss of income can negatively affect a family’s quality of living. Survivor benefits are no substitute for life insurance at this point.
Regardless of age, keep in mind that Social Security pays a one-time death benefit of an astoundingly low $255. It’s time to take a good look at your life insurance situation — and how the sudden loss of income would impact your family.
Do you still have loans and other debt?
Debt-free retirement is everyone’s dream, but an unlikely reality for most of us. Typically, people still owe on mortgages, car loans, and even education loans for children or grandchildren.
Here is a video that gives good pointers for reducing your debt as you get older.
Maybe you’ve sold your primary home but are upgrading to a different home for the remainder of your retirement years. You may need a new mortgage. Examining your life insurance and whether it’s still adequate is important.
Additional life insurance deserves a look when taking on new debt, such as caring for an aging parent.
If your spouse and children still rely on your income, you may consider additional riders for special needs or adult dependent — such as one who may need home care after you’re gone. Make sure there’s enough funding available for their continued care.
Remember that children are no longer eligible for their parents’ health benefits once they turn 26. If you’re still caring for a young adult, be prepared to take on new expenses.
Do you expect to have estate taxes and other debt?
Estates and wills are a crucial part of your legacy to your loved ones. You need to examine your estate every three to five years to determine how any changes will affect your dependents’ future.
If you’ve accumulated a lot of assets, including real estate or business ownership, taxes can be complicated. Life insurance can help to simplify how estate and business tax obligations will be met. You should consult with an attorney that specializes in estate planning.
How does senior life differ?
In general, senior life insurance is targeted either toward:
- Providing current income
- Covering burial and other final expenses after you’re gone
Since people are living longer than in previous generations, today’s seniors are trending toward using life insurance while living, and purchasing burial and final expense policies.
As a result, life insurance trends and options for seniors are abundant; choices are vast, whether you’re nearing retirement or enjoying it.
Today’s seniors face new situations such as the unexpected sale of a home, relocation, or even being responsible for an aging parent of their own. The life insurance industry is watching these trends closely.
There are creative plans for long-term care insurance for yourself or a parent. There is also a variety of mortgage and other debt-related life insurance available.
Life for Seniors Checklist
Choosing the right senior life insurance policy is a family decision. A spouse and any children will be automatically affected by your death, often in unexpected ways, if they aren’t informed of your decisions beforehand. You should consider these actions:
Checklist for Senior Life Insurance
- Involve your spouse and children in decisions
- Consult with your financial advisor and accountant
- Make a will as soon as possible, and review it every 3-5 years
- Review your estate with a specialized attorney
- Clearly designate your beneficiaries, including charitable organizations
- Discuss all installment debt, including auto and mortgage obligations
- Include provisions for long term and critical care
- Consider an irrevocable trust in preparation for estate taxes and other unexpected expenses
- Prepare for care of dependent children or spouse
Staying in charge of your total financial picture will prevent surprises and misunderstandings. You need to be clear about your wishes — such as beneficiary designations and any contributions you plan to make to charity.
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Types of Life Insurance for Seniors
An internet search for “senior life insurance” will send you into the world of unwanted emails and other aggressive ads that can leave you feeling like prey. There is a lot of useful information available from valid websites, though. But you need to be aware of the luring promises of advertisements.
Here is a good story that explains how the loss of a spouse ended up helping this widow live comfortably through life insurance.
Many things need to be considered, including estimating how much you’ll need to cover expenses for the end of your life or even taking care of children and grandchildren.
As mentioned previously, life insurance for seniors can be categorized this way:
What types of policies are marketed to seniors?
Here are some basic types of insurance that are marketed to seniors, and why they may be attractive to you:
- Guaranteed whole – lifetime protection with level rates (stay the same), plus the ability to grow the cash value of the account over time
- No medical exam – policies with the highest acceptance rates, attractive to anyone concerned with coverage denial due to medical history or chronic illness
- Burial and final expense – a form of life insurance that pays a death benefit to a family member to be used for whatever purposes they wish
- Long-term care – a policy that’s designed to ensure payment of long-term care-related expenses for a person’s lifetime
- Graded benefit – a provisional policy that ensures payment (almost always lower than the contract amount), even if the deceased has passed away before the designated waiting period
- Mortgage insurance – specifically designed to pay mortgage balances in the event of death
- Irrevocable life insurance trust – (ILIT) a policy that helps to reduce or eliminate the burden of estate taxes on the spouse or beneficiary
Term vs Whole Life Insurance for Seniors
Many seniors shy away from term life insurance because they think their age will inflate term life premiums beyond their budget. However, term life has distinct advantages over other types of insurance, including the fact that it’s an investment.
Term life insurance is the most affordable option, no matter your age. It may also offer you flexibility, such as converting it into cash or other options. If you’re curious about the maximum age for issuance of a term life policy, your best advice is to discuss your options with an agent.
Whole life is another option that ensures the longevity of a policy. People who prefer whole life over term cite its endurance — it lasts your whole life if you keep up with premiums — and its ability to grow in value over time, no matter when your death will occur.
Simplified Issue vs Guaranteed Issue Life Insurance for Seniors
Both simplified and guaranteed issue life insurance can eliminate fears of rejection due to health concerns. If anything ranging from prescription medications to chronic illness hold you back from purchasing life insurance, one of these options can help you.
This video illustrates the difference between a simplified issue and guaranteed issue.
But expect to pay more. Expectations by age group can be found here.
No-Exam Life Insurance
There are several marketing schemes that talk about the advantages of no-exam life insurance. The reality is, though, that many life insurance applications require you to reveal certain medical conditions before you get approved anyway. This may come in the form of life insurance questionnaires, but there are no guarantees of acceptance, even without an exam.
The advantage of no-exam life insurance to seniors is avoiding certain medical issues being revealed, such as a chronic disease or a long list of prescription medications. People with conditions such as diabetes, a family history of heart disease, or a recent cancer diagnosis can consider this type of insurance.
However, premiums are usually far more expensive with this type of insurance.
There are plenty of people, especially seniors, who may qualify for lower rates on life insurance without avoiding medical exams, even if you have a chronic condition.
What policy options and riders are available?
Here’s where seniors and their financial advisors can customize their policy. Insurance riders are like menu options that allow you to add special coverage.
Think of riders like the add-ons you’re offered when you buy major household purchases — extended warranties, for example. There are limitations, however, so you need to understand your options.
For seniors, riders can be an effective way to address specific circumstances, including how the death of a spouse affects them.
Examples of typical life insurance riders seniors might consider include:
- Waiver of premium – the policyholder keeps the policy current but free of charge due to certain circumstances, such as disability
- Accidental death – an additional benefit paid in case of accidental death (cause of death may be highly scrutinized, however)
- Accelerated death benefit – tapping into a policy’s value to use toward end-of-life expenditures
- Term conversion – being able to convert a policy at the end of its term (10, 20, or 30 years) into a permanent policy, usually without the need for a medical exam
- Return of premium – guarantees re-payment of the premiums you’ve paid over the years on a term policy that expires before your death. Be aware, though, that it is paid back to you without interest
Examples of life insurance riders that seniors might consider as separate, more cost-effective policies altogether include:
- Disability rider – most insurance agents point out that a separate disability policy is usually more cost-effective because of all of its rules
- Long term care rider – like disability riders, it’s often more beneficial to get a separate long-term care policy, because it has specific requirements
- Critical illness – a rider or separate policy that, like long-term care, can help families negotiate serious illnesses or accidents that standard medical insurance won’t cover
Shopping for Senior Life Insurance
When researching what’s out there for seniors, be aware: scams and predatory marketing abound. Although marketing materials might have you under the impression that insurers specialize in senior life policies, no such certification is required.
Consider consulting with your own trusted financial advisor first. Good places to start are news articles from trusted sources, or legal sources The following video specifically addresses why life insurance is particularly important for the generation known as Baby Boomers, who are now considered seniors. Many are living much longer and productive lives.
What seemed to be adequate coverage in your 20s and 30s may no longer be what is needed now. Evaluating your situation at least once every three years is a good rule of thumb during your senior years.
How Much Coverage to Buy at Each Age
- One size doesn’t fit all – Assessing the various chapters of life insurance needs and where your particular circumstances fit in is a good start for estimating your life insurance requirements. By the decades:
- 50s – If you are supporting a family and spouse, you should consider a cash value policy while you still maintain an income. Women should also be aware of the advantages of planning to include life insurance into their overall plan.
- 60s – Most people 65 and older consider themselves in excellent health, with good reason. People are living longer, and generally, living much better than their parents’ generation. However, longer life may result in the need for long-term care insurance, a plan to consider for many in their 60s — before the need actually arises.
- 70s – People in their 70s might find their insurance needs changing once again. They may have expired term policies, or finally feel able to leave a legacy through an existing policy. They may also find themselves considering life insurance as a means for estate planning.
- 80+ – Remarkably, there are more people today than ever before working with no plans to retire. Options such as graded benefit for immediate use of benefits, and guaranteed universal life (GUL) are still options for people in their 80s.
Getting the Best Rate at Each Age
It’s not too early for people in their 50s and 60s to reevaluate the role life insurance plays in their current financial circumstances. Even if you have healthy retirement savings, early death of either you or your spouse can complicate Social Security benefits and other unexpected expenses at the end of life.
This video from an insurance agent describes how life insurance can also be used for retirement, whether you are in your 50s or 90s. Unfortunately, survivors can find themselves with unexpected expenses in retirement. Ways to use life insurance for this purpose are suggested.
At any age level, you may be able to leverage cash value you already have, and alternately, invest in permanent life insurance, tax-free.
- 50s – Term life can still provide an option you only thought was appropriate for younger people. If you’re experiencing or anticipate any health concerns that might preclude you from getting affordable coverage, no-exam life insurance could be for you.
- 60s – Changes in life in your 60s can include anything from retirement, selling a business, or even buying a new house. There are a few questions to ask yourself when considering new life insurance, or converting term life into whole.
- 70s – Term life in your 70s may still be an option, but so is whole life, which can provide even more coverage for outstanding debt you don’t want to leave to your heirs. Even if you’re in good health, you probably worry about the ironic effects of actually living longer, and how much it may cost your family.
- 80+ – Believe it or not, options available for insurance at age 80 and up are numerous and. Some insurers still offer term insurance, although the rates are considerably higher than for people half that age. Estate planning should definitely be in order. Living benefits from existing life insurance may be considered.
Rates for senior life insurance vary greatly between companies, and a lot of it has to do with one’s general state of health. Senior-friendly companies understand the value of your continued health. They’ll even offer you incentives to stay healthy.
For example, they usually welcome the conversion of an expiring term policy, and if you are in good health, they may offer you lower rates.
If health issues are a concern, and you don’t already have adequate life insurance in place, many seniors are by now considering no-exam life insurance.
- 50s – If you’re not locked into rates already, expect your insurance rates to go up significantly. It’s best to look at multiple options. You may want to look into purchasing supplemental disability insurance, especially if your family’s income relies solely on a specialized profession.
- 60s – Staying on top of your options when you are close to retiring, is an important subject to discuss with your financial advisor during your 60s. You may also want to consider term insurance, even at this age.
- 70s and 80s – By now, burial and final expense insurance should be part of your life insurance plan. You should also plan to settle open-ended debts or taxes so they aren’t a burden on your family.
Retirement and Long-Term Care
Retirement and long-term care should be considered long before you need either. Today’s definition of retirement for most people no longer includes an employer’s pension or adequate Social Security income for living comfortably.
This video discusses how many Americans have not adequately saved for a comfortable retirement, mostly because fewer employers are offering plans, and people are finding it difficult to save extra money. It’s never too late to address this concern, however.
The information presented in the video emphasizes the need to save throughout your lifetime in order to plan for a comfortable future. In addition to your 401K or another retirement fund, let’s examine how life insurance may help to supplement your savings.
Life insurance can be a valuable ingredient of your retirement plan’s viability and reserve. It should not necessarily be thought of just as a death benefit; rather, it can be used as leverage during your lifetime.
Life insurance should not be overlooked as a stagnant investment. Rather, it can offer investment components to your overall financial portfolio, because it can put cash value to work for your retirement.
Variable and variable universal life, for example, can work for you because they grow in value — particularly if markets are healthy enough for accounts to increase in value. Life insurance is not a replacement for retirement savings, but it can significantly enhance how you live in your senior years.
Another way to use life insurance during retirement, especially in times of need is to tap into your existing life insurance savings.
The following video explains the advantages of using benefits from your lifelong insurance savings policy.
This is an example of how life insurance savings over your lifetime can help offset unexpected costs to your family — it is not recommended to use, however, unless it is needed during retirement.
How to Determine Retirement Needs
Regardless of the amount in your retirement savings account, it’s essential to understand and maintain your portfolio, just as you do with your car or home.
Here, the Internal Revenue Service explains certain rules that are crucial to understanding retirement planning.
One often-overlooked option sitting on the top shelf of that closet you’ve been meaning to clean is converting a term life policy into permanent life insurance.
Another possibility you may want to consider is accessing existing life insurance assets while you’re still living. It’s definitely possible to achieve this tax-free even before you officially retire. Remember that this is your own money being put to work.
Long-Term Care Insurance
Long-term care insurance is a relatively new phenomenon in life insurance. This is because population trends are changing with America’s aging population.
Today’s generation of seniors is now grappling with issues their parents never predicted. Social Security is not as secure as it was for the previous generation. Long-term care is a separate kind of insurance that you should consider for yourself or an aging parent.
Buying a long-term care policy adds many unknowns to life on life’s terms. Unlike death, which of course is inevitable, long-term care isn’t as predictable.
Here are some considerations, keeping in mind the well-known fact that the longer people live, the more expensive their daily living expenses become if they require additional assistance:
- Here’s who should consider it because of changing family dynamics
- What people can expect to pay for long short-term care insurance
- Be sure to know what it covers
- There are eye-opening age and other limitations within long-term policies
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The Bottom Line
Retirement and senior living are a state of mind, rather than a state of livelihood. It no longer necessarily means cessation of work.
As one trusted financial planner explained it, “We now shift from the accumulation phase of income into the distribution phase.”
Life insurance for seniors isn’t your previous generation’s pair of jeans anymore. The types of life insurance available should reflect your individuality — not a template.
Decide what kind of life insurance is appropriate for you and get a quote using our FREE tool below now!