As you get older, you may start to think about life insurance on a more frequent basis. You may be having questions about purchasing life insurance as a senior citizen or possibly even expanding any existing coverage that you have. Rest assured that it is never too late to purchase a life insurance policy, no matter what age you may be. Many individuals fall under the misconception that adults over 50 should not purchase life insurance because it may be too expensive or extremely challenging to obtain. Fortunately, purchasing life insurance over the age of 50, 60, or even older can be very simple and easy to obtain. Insurance companies understand that your wishes are to have the absolute best financial situation for your family once you pass away.
Obtaining Life Insurance for an Individual 50 to 60 Years Old
Obtaining a life insurance policy for an individual over 50 is fairly simple and does not take a substantial amount of time. If you are in reasonably good health, you have every life insurance option open for you. These are the most common ways people between 50 and 60 years old obtain life insurance.
Term Life Insurance
If you have remained uncovered throughout your life or are seeking to increase coverage for a period of time, then you should take a look at term life insurance policies first. Term is the cheapest type of life insurance in terms of the annual premiums due. With a term life insurance policy, term coverage will offer traditional life insurance benefits such as a substantial death benefit with potential policy options that are customizable. As long as the term is level, monthly premiums will remain locked in place at a predetermined rate for the entirety of the term that you purchase. Level policies are sold for fixed periods of time between 5 and 30 years in length. This will easily aid with other financial situations such as mortgages and college costs, if an untimely death occurs. You can get all this while paying a very affordable monthly payment that you are able to budget for. Term is simple, straightforward, and provides good coverage for people over 50.
Term Conversion to Whole Life
Another life insurance plan that could be beneficial to you or anyone over 50 would be converting an existing term policy to a permanent policy. If you elect to purchase a convertible policy, you may also be able to convert to a permanent policy with no medical exam or need to prove insurability. This type of flexibility could be helped as your needs will change over time. If you decide to purchase a convertible policy, make sure to find out exactly how long of a timeframe you have in which to convert the policy to a permanent one after purchase. Convertibility is possible only during the time agreed to by you and your insurer within your contract.
Lastly, if you are concerned that your family may be burdened with medical bills or if you were to become sick, then you may want to consider a life insurance policy called Quality of Life Insurance. Quality of Life Insurance policies offers living benefits that may be able to provide you with paid policy benefits while you are still alive. These include payments made during terminal or chronic illness to help ease the financial burden. It can also have an annuity payout component for later into retirement years. It is extremely important to understand how living benefits work before you choose this type of policy. For adults over 50, life insurance can provide peace of mind for you and your family.
Obtaining Life Insurance for a Senior Citizen over 60
Senior citizens over 60 years of age typically are entering their retirement years. The reasons that they purchase life insurance are different than a younger person, and typically they want a more permanent form of life insurance than someone younger may want.
Large Traditional Whole Life Policy for Estate Planning
It is usual for someone of this age to want to provide for their loved ones after they pass, and to help grandchildren with their educations, or leave a legacy to a charity. They may also be doing estate planning, and looking to pass on a large estate in a way that avoids estate taxes. If these are the reasons for seeking life insurance, they probably want a large traditional whole life policy. These are special policies that are best handled with someone who is CASL certified, which means they specialize in dealing with estate planning for senior citizens. These large whole life insurance policies are available for people of this age, but if you are retired it will typically be a single premium policy. This means that one large payment get’s made into the policy, and that is all. It is a transfer of wealth for estate purposes and nothing more.
Final Expense Life Insurance
With some adults that are over the age of 60, 70, or even over 80, they may be looking for a smaller coverage amount that is enough to cover final expenses such as burial costs or paying off bills. These types of policies are called final expense life insurance. These policies are smaller whole life insurance policies will usually range from around $5000 to $50,000 in death benefit and can cover any expenses after you are to pass away. Final expense life insurance has less underwriting than a traditional policy, but also comes with a smaller face and can be a bit more expensive. There are a couple of different versions of final expense life insurance.
- Simplified issue- this type of policy has underwriting, but no medical exam. The underwriting may be as simple as a few medical questions on an application where the applicant must attest to the fact that they do not have a serious disease or terminal illness. A simplified issue policy may also pull medical records in some cases, but it is typically fairly easy to get approval on the policy as long as the applicant does not have serious heart disease, diabetes, or cancer.
- Guaranteed issue- this type of policy is the most expensive, but anyone can get coverage regardless of their health status. There may be a waiting period where no death claim can be filed within a year or two of the policy issue date. People should only pay for this type of policy if they can not qualify for another type because it is so much more expensive.
- Term till age 80- some insurance companies such as New York Life offer a term policy for final expense life insurance. This is generally not recommended because people can be expected to outlive the policy expiration in most cases. The price is also not level and will go up every year that the insured gets older. While the beginning years will be more affordable, it is probably not worth losing the coverage if you outlive the expiration date. There is also no cash value and the policy does not qualify for dividends, because it is not a whole life insurance product.
How to Lower Costs on Life Insurance for Seniors
Even though most senior citizens have some health ailments, it does not mean that they can not qualify for affordable life insurance. The best way to keep the price of life insurance down is to do three important things.
- Shop different companies- Depending upon the amount of life insurance that you need, your age, your sex, and your health, you may get a vastly different price from one company than from another. Make sure that you compare quotes from many different companies in order to get the best price. It is usually best practice to use an independent brokerage instead of an agent that works for one insurance company so that they do not have a conflict of interest.
- Only buy the amount of death benefit that you need- Unlike for younger people, where we recommend that they buy a bit more life insurance than they think they might need due to inflation and life changes, for seniors we recommend that they keep the face amount limited to only as much as they need and no more. This helps keep the cost down and makes sure that no money is wasted.
- See a doctor prior to applying and make sure you adhere to medications- If you have any health issues that are controlled with medication such as blood pressure or cholesterol, make sure that your medications are dosed properly and you adhere to your regiment. If your health issues are successfully controlled with medication, the life insurance company will be more likely to give you a favorable health rating, which will save a lot of money on your premiums.
Why Whole Life Makes More Sense than Term for Seniors
For people who are younger, a term life insurance policy is most often recommended. It allows them to obtain a lot of coverage for a small amount of money. They still have the option to convert the policy to whole life insurance later, and they may not need any coverage after their kids are grown and out of the house. For seniors, the recommendation is the opposite. This is because the reasons that seniors purchase life insurance are so different than why younger people purchase life insurance.
Seniors want coverage either for estate planning purposes or to help their beneficiaries cover final expenses associated with death. In either case, a permanent policy is required so that it will definitely provide coverage no matter how old they are when they die. Term life insurance is expensive for people over 70, so it does not make much sense to pay a high price for a policy that may not last long enough to pay out a death benefit. Even though whole life insurance is more expensive, it also saves money in the cash value account and qualifies for dividends. As long as the premium payments are made on time, it is also guaranteed to last the entire life of the insured. Senior citizens should rarely consider a term life policy.
Consider a Long Term Care Rider or Insurance
Because the cost of long-term care is so expensive, long-term care insurance can provide important protection for seniors. Instead of having to spend 100% of their assets before qualifying for medicare to cover long term care expenses, seniors can preserve their assets and let the insurance cover the cost of the nursing home or long term care facility. Life insurance can come with a long term care rider that will pay a benefit if you enter a long term care facility. The benefit may not be high enough to cover the full cost of the care though. In order to provide full coverage, a separate long term care policy can be purchased for a relatively affordable price. This is an important way to preserve the value of your estate so that you can pass things on to your heirs.