Life Insurance for Seniors – What’s The Best Option?

We all want to protect and provide financial support for our loved ones and improve our lives, and life insurance is the best way to do it. A life insurance policy can help you support your family and friends even after you’ve passed. Even though buying life insurance earlier in life is always recommended because it has certain benefits, it is possible to get it even if you are a senior.

Deciding you want a life insurance policy is an easy part; much more complicated is: what kind of senior life insurance should I get? Choosing a life insurance plan will determine your living benefits and the help your family will get after you’re gone.

Everyone has a suitable type of life insurance, and we want to help you find the right one for you. In this article, we will talk about:

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Let’s get started!

Why Do Seniors Need Life Insurance?

Another aspect of life insurance policies is that people can benefit while still living. Benefits vary with different types of policies, but here is a list of reasons why people need to buy life insurance:

  • Provision of an inheritance for your family.
  • Paying off debts, like a mortgage.
  • Providing funds for final expenses.
  • Paying outstanding medical expenses.
  • Supporting a dependent with special needs.
  • Covering business-related financial obligations.

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Therefore, every man on Earth would benefit from life insurance policies in at least one of these aspects. Many people decide to get life insurance for seniors because their pension will not be able for their spouse when they die due to excluding survivor benefits. So, a life insurance policy could support your spouse financially after you pass.

Are You Too Old?

A senior life insurance policy is slightly different in some aspects, but generally, it works similarly to regular life insurance. Seniors can choose between term life, whole life, and universal life insurance.

This can vary from company to company, but most life insurance companies offer term life policies through age 80. However, the length of the level term period will get shorter, particularly as you enter your late 50s.

When it comes to whole life policies, they usually can be obtained through age 85, but some insurers will have lower maximum ages.

Types of Life Insurance Policies

The crucial step in choosing life insurance is researching and understanding different options. It can be overwhelming because there are plenty of life insurance options.

Still, we will discuss the most popular choices for seniors’ life insurance and explain how each one works and its advantages and disadvantages. You will determine the best life insurance for you and your family based on your goals and preferences.

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Term Life Insurance

Term insurance pays benefits if the policyholder dies during the term of the policy. This type is called term because it lasts for a specific period, from one year to 30 years. 

People usually purchase this policy for an income replacement. That way, it supports them in covering the years of a mortgage (or other specific debts) or help them cover the years during which their kids or grandkids go through college. 

One of the most significant advantages of term life insurance is that it is low-cost and straightforward to understand and use. However, it’s not the same when you get your term life insurance in your 20s and 60s. 

The difference is your health state. To get a term life insurance policy, you must take a medical exam. Of course, for people who don’t have any health issues, this won’t be a problem.

To sum up, if you’re in good health for your age and want affordable coverage for a specified time, a term life policy is a potential option. Still, you must research all available term options because there are many: convertible term life insurance, renewable term life insurance, level premium, and more.

If you’re in your 60s and 70s looking for term life insurance, it’s essential to know that you can typically secure a 10- or 20-year term life policy. And if you’re over 80, most life insurance companies won’t give you an offer.

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Advantages

  • Easily-understood. Most people don’t need the assistance of a financial advisor to use term life insurance. The idea is simple: a term life insurance policy provides a death benefit if the policyholder dies while the policy is active and premiums are paid.
  • Less expensive. It is more affordable compared to some other types but offers fewer possibilities.
  • The death benefit is tax-free. When the beneficiaries receive a lump sum from the insurance company, that money proceeds tax-free. That means beneficiaries will keep the total death benefit amount and use it as they want.

Disadvantages

  • Doesn’t cover final expenses. For many older people, temporary insurance isn’t the best option, and the most common reason is that term life insurance can’t support funeral costs.
  • No cash value. Term life insurance policies don’t have a savings component (like permanent life insurance do). That means that you can not borrow and withdraw money against your policy.
  • Medical exam. There are many types of term life insurance, and all of them, except one exception, require a traditional medical exam. This means people in poor health should skip a term life insurance policy because they won’t get it, or it will be too expensive. 
  • Age limit. The maximum age limit is different with every life insurance company and depends on term length, but it is usually the age of 50 for all term lengths. So, people over 60 years are limited to 10 and a 20-year term, while people over 80 would have serious problems finding any life term.

Whole Life Insurance

Whole life insurance is a type of permanent life insurance, meaning the policyholder is insured as long as life insurance premiums are paid on time. Besides that, it is a type of cash value life insurance that supports you in building cash value.

According to Insurance Information Institute, whole life is the most purchased, one of the best life insurance and used type of permanent coverage. Other types are variable life insurance and indexed universal life insurance.

The fantastic advantage of whole life policies is that they are unique and personal because the policy is based on the mortality risk, medical history, and desired coverage level.

Because the whole life policy has a cash value component, it accumulates cash value over time, and you can withdraw the cash or take out a loan against the value. This policy is usually more expensive than a term life policy, but you have an option to build cash value by over-funding your policy and even leave a legacy for your family.

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Whole life insurance pays benefits regardless of when the policyholder dies as long as the policy is still in force. When buying a whole life policy as seniors, healthy men should expect to pay between $1,122 and $2,089 a month for a $250,000 death benefit. For healthy women, that amount is between $934 and $1,801 per month.

There is also an option to buy final expense life insurance for seniors. It is a type of whole life, usually without a medical exam – you only answer a few health questions on the application. This way, premiums are lower, and many people think it is one of the best senior life insurance.

Advantages

  • Tax-free death benefit.
  • A permanent estate. Whole life policies provide a guaranteed death benefit for the insured person’s entire life, so the total amount is set aside for their family when their first premium is paid.
  • Withdrawals that an insured person can access while alive are considered a tax-free return of cost basis. 
  • Loans that policyholders can take against their policy are not considered to be taxable events. It stays the same even though the policy may significantly gain over-life premiums.
  • Disability protection. If the insured person becomes disabled, whole life insurance can continue to be funded.
  • Dividends. The best life insurance companies to buy whole life policies from are mutual companies because you can earn dividends and use them to repay the policy loan.
  • Infinite Banking Concept. We will explain later how to get started with Infinite Banking and all the details you need for that. But, here, we want to highlight that thanks to the whole life policy, you can start your Infinite Banking process and become financially independent and secure.

Disadvantages

  • More expensive. When we compare it to other term policies, whole life’s monthly costs are much more costly, even 5 to 10 times. It may sound terrifying, but you must consider what you get with that money. Whole life insurance policies are more expensive because they offer a cash value account. So, you are not wasting money; you pay more because you have an option to use your policy as an investment vehicle. That way, you can multiply your money. 
  • More complex. Some people have issues understanding how whole life insurance works because it has more components than term life. However, you can certainly do it on your own if you’re ready to do some research. And of course, if you need help, there are so many professionals that you can ask for advice and suggestion. 

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Funeral Insurance

Another type of life insurance for seniors is funeral insurance, also called pre-need insurance. This insurance is usually purchased from funeral homes, and the payout goes directly to the funeral home to cover the expenses of prearranged services.

Pre-need insurance is different from final expense insurance (or burial insurance) because it only pays for your funeral. On the other hand, burial insurance pays the death benefit to beneficiaries, who use it however they want.

The advantage of this type of insurance for seniors is that your family wouldn’t have to worry about paying final expenses because it will automatically be covered. The disadvantage is the lack of other options – there isn’t a death benefit or the cash value.

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Final Expense Insurance for Seniors

Final expense insurance, or burial insurance, is a no medical exam required whole life policy, usually between $2,000 and $40,000 in coverage. The payout from the policy will cover funeral expenses, outstanding medical bills, or credit card debts.

One of the advantages seniors love about final expense insurance is that you don’t have to be in good health to qualify, and you can just answer a few health questions. Final expense insurance is a permanent life insurance policy with a fixed cost for life. Additionally, the death benefit will never decrease, and cash value accrues over time.

The average monthly payment ranges from $50 to $150 in the $10,000-$15,000 range. As usual, the cost will vary based on your age, gender, state of residence, and the amount of coverage you buy.

Guaranteed Universal Life Insurance for Seniors

Universal life, also called adjustable life, allows more flexibility than a standard whole life policy. With universal life insurance, you have options to reduce or even skip payments. 

This may cause the policy’s value to increase at a lower rate since the expenses are covered with the current cash value. If you have a chronic or terminal illness that makes it hard to qualify for a term or whole life insurance, universal life insurance is something to consider because it is the third path. People who choose this option will have to undergo an underwriting process just as they would when buying a term life policy for seniors.

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No Medical Exam Life Insurance for Seniors

Some seniors never try to get insurance because they think they will not be approved because of their age or health. But, they are wrong. 

There are many enhancements in insurance underwriting and specialty insurers’ availability to cover people with higher risks. Therefore, life insurance is available to everyone. For people in poor health is available an option to get a policy without medical exams. It is usually for more minor policies, but it is still a good opportunity.

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Based on answers to health questions on the application is final expense insurance. It’s crucial to answer all questions honestly in the application process so your life insurance coverage can be issued accurately. If someone misrepresents the truth, some insurance companies will cancel the policy or deny death benefits if incorrect information is provided.

Guaranteed Issue Life Insurance for Seniors

Guaranteed issue life insurance is a type of permanent life insurance that doesn’t require you to answer health questions, undergo a medical exam, or allow an insurance company to see your medical and prescription records. Because of this, many people call it ”no question life insurance” or ”no question final expense insurance”.

Even though it sounds great, there is a catch. Guaranteed issue life insurance always has a waiting period. If people die during the waiting period, their beneficiaries will not receive the full death benefit. The waiting period is usually two to three years. Still, beneficiaries will get all insurance premiums plus interest, usually at a rate of 10%. So, the beneficiaries will still get something, but it will be less than planned.

Guaranteed life insurance get their name because the company ensures they will issue a policy to you as long as you are within the allowed age range when you apply. You get the guarantee that they will accept you as a policyholder. 

The usual age range to qualify is 50 to 80 years old. This type of insurance is only for people with no other option because of their health. Or if they can’t afford any different policy because of their health. 

Here is the list of conditions that will disqualify you from other types of health insurance:

  • Terminal illness with a life expectancy of less than two years.
  • You’re on dialysis.
  • You have Alzheimer’s or dementia.
  • You have had or need an organ or a tissue transplant.
  • Cancer and it’s not basal cell or squamous cell skin cancer.
  • AIDS or HIV.
  • You are in a nursing home or hospice.
  • You are in a wheelchair.

Costs of Life Insurance for Seniors

How much will life insurance for seniors cost? Let’s see some specific numbers!

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Term Life Insurance for Seniors

We will represent an average senior life insurance cost of $250,000.

  • 10-year term

Male age 70 for a 10-year term will pay an average of $191 a month. For females of the same age, it is $127 a month.

For males aged 75, the monthly cost is $348 a month. For women of the same age, it will be $223 a month.

  • 15-year term

Males over 70 will pay $260 a month for a 15-year term, while for females, it will be $255.

The monthly cost for men over 75 years will be $601 a month. And for women in the same age group, it would be $412 a month.

  • 20-year term

Men age 70 or over will pay $409 monthly for a 20-year term. For the same term, females will pay $376 a month.

Many insurance companies don’t offer a 20-year term for men and women 75 or older. There are always some exceptions because every company has its own rules. Still, the best thing you can do is to contact multiple insurance companies to compare life insurance quotes before buying.

Universal Life Insurance for Seniors

Here is the statistic for average seniors’ life insurance costs of $250,000.

  • For males aged 70, it is $751 a month.
  • For females aged 70, it is $628 a month.
  • For males aged 75, it is $1,330 a month.
  • For females aged 75, it is $949 a month.

Whole Life Insurance for Seniors

And here is the average senior life insurance cost of $250,000 in whole life insurance.

  • Men aged 70 pay $1,365 a month.
  • Women aged 70 pay $1,171 a month.
  • Men age 75 pay $1,904 a month.
  • Women aged 75 pay $1,573 a month.

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What Is the Best Senior Life Insurance?

When we consider everything, whole life insurance for seniors seems like the best life insurance. Here are some whole life senior life insurance FAQs.

Do I Need a Medical Exam?

That depends on the plan you buy from your life insurance company. Some life insurance companies offer limited coverage without medical underwriting. If you are in good health, those plans may not be your best solution. But, if you have any health issues, this can be beneficial.

However, if you’re healthy, there is no reason not to qualify for a plan that includes medical exams. This is because it could provide you with higher coverage and more options.

How Much Coverage Can I Get?

The truth is it depends on the life insurance company. This amount can range widely, but the most common is between $10,000 and $50,000. Some insurance companies have a minimum amount of coverage and usually require a medical exam for higher amounts.

Reasons Why Whole Life Is the Best Life Insurance

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Cover Funeral Costs

Today the average funeral expenses are between $8,000 and $10,000, but often even more. A whole life plan can ensure that your closest ones don’t have to worry about how to cover these costs in a time of mourning. This policy will support your family in paying estate taxes, end-of-life expenses for medical care, and the final expense.

Pay off Debt or Mortgage

Unfortunately, it is common in the USA for family need to sell off assets (like family homes) because they cannot afford the additional cost of a second mortgage. So, if you put a life insurance policy in place to pay off a mortgage, or any other debt, you will help your family tremendously.

Plan For Medical Bills

Another fact is that seniors often receive high medical bills when they pass, which can affect their inheritance. This can cause stress and a significant financial burden during a difficult time. However, we can avoid these financial crises because a whole life insurance policy for seniors can give us peace of mind by knowing our family can take care of any medical bills we leave behind.

Tips on How to Choose the Right Life Insurance Company

Here is some advice to have in mind when choosing the best life insurance company.

  1. An A (or above) rating from AM Best. AM Best gives A ratings to life insurance companies it considers to have an ”excellent” (A-, A) or ”superior” (A+, A++) ability to meet their ongoing insurance obligations. 
  2. Customer complaints: Our advice is to look at the insurance company’s ”complaint index” for life insurance. An index exceeding 1.0 means the life insurance company received more complaints than expected for its size. On the other hand, an index less than 1.0 means it received fewer. So, it would be best to avoid companies with indexes much higher than 1.0.
  3. The policy features: Some life insurance companies automatically include value-added benefits (or riders) in their coverage, while others charge extra. This is especially the case with accelerated death benefit riders like chronic, critical, and terminal illness riders.
  4. Application process: After determining which companies you like, it’s time to get life insurance quotes and apply. It’s more likely you will talk to an agent who can give information about how transparent or accessible the service may be in the future. So, paying attention to the agent’s behavior in your communications with them is essential. 

Tips on How to Shop for Senior Life Insurance

  1. Before buying a policy, it’s crucial to compare different offers. It would be best to compare monthly premiums and death benefits to ensure you get the right policy for your budget and financial goals.
    And when you’re comparison shopping, our advice is to disclose your medical history so that you’ll get the most accurate quote. It’s important to know where the insurers stand on various health conditions because they have different underwriting standards.
  2. You can consult a fee-only life insurance consultant to make sure you choose a policy that will suit your needs. And this is especially if you decide to get whole life.
  3. Read carefully, and don’t sign up until you’re entirely sure! Make a note of important details and ask questions or for help if you don’t understand some conditions.
  4. Research additional features to add to a policy. These life insurance riders are usually for extra costs, but they can change your policy. For example, an accelerated death benefit rider allows you to access a portion of the policy’s payout if you get a terminal illness diagnosis. Most people with bad family medical histories choose an accelerated death benefit rider to help themselves in the future.

Be Financially Independent

Another important reason we think whole life is the best life insurance for seniors and anyone is the possibility to start your personal banking process. That process is called Infinite Banking or over-funded life insurance. Economist Nelson Nash created Infinite Banking in the 1980s.

Infinite Banking is designed to support individuals to become their own bankers, take control of their finances, and build wealth. Infinite Banking outlines that financial freedom can be achieved if individuals use dividend-paying, whole life insurance to establish their own banking system.

It’s possible to stop depending on traditional banks because the Infinite Banking Concept asserts that individuals can leverage whole-life policies to borrow from themselves. It is possible because policyholders can borrow against their policy the actual cash value. To put it in other words – you can use your whole life policy you have taken out as collateral to borrow from yourself throughout your entire life.

Yes, this means that people can use over-funded life insurance to finance a range of assets, from their home to their child’s college fund. Another vital component of over-funded life insurance is that policyholders can grow their wealth even as they borrow from themselves. Whole-life policies allow policyholders to earn dividends, so the policy’s cash value increases over time.

Over-funded life insurance also seeks to take advantage of death benefits. One of the most significant features is that death benefit from a whole-life policy is guaranteed (as long as the insured person has paid their premiums). When you pass away, your death benefit will be given to the beneficiaries named in your policy. In turn, the beneficiaries can establish an Infinite Banking System for themselves, contributing to generational wealth.

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Are You Too Old for Infinite Banking Concept?

If you are not done buying things, you’re not too old to start. Why? Because the Infinite Banking Concept puts you in control of your money. It eliminates the traditional bank and puts you in control, meaning you make a profit instead of banks. So, no one is too old to start Infinite Banking Concept!

When people wonder whether they are too old to start over-funded life insurance, they actually ask if the insurance cost is too high for them. It is not without a reason because it usually is more expensive for older people. However, because that person is older, the insurance company has to reserve more money sooner to ensure they can pay the claim. Thus, those two issues cancel each other out. The higher premium is canceled out with a higher reserve.

Final Thoughts

During our lifetime, we are constantly working and trying to improve our living standards and help our family and friends achieve their dreams. That aim is even stronger as we age because we don’t want our family to suffer and have financial issues when we are gone.

And the role of life insurance is to help you achieve that. The best life insurance will support you during your life and give financial protection to your family and friends when you die. There are many different options, but we will always advise choosing a whole life insurance policy.

Whole life is the best life insurance for seniors because it provides permanent coverage and cash value. With a whole life policy, you can build your own banking system and become financially independent. Thanks to Infinite Banking, you can start building generational wealth, and your kids can continue their legacy.