How to get life insurance for seniors

A life insurance policy can provide peace of mind that your debts, final expenses, and beneficiaries will be taken care of after you die. But as you reach retirement, you may wonder: Is life insurance for seniors worth it? And what is the best life insurance for seniors?

Being over 65 may limit your life insurance choices -- especially when you’re over 80. However, there are life insurance options for seniors.

Learn more about how life insurance policies for seniors may benefit you and your survivors, the best life insurance policy for older adults, and what you can expect to pay.

Why should seniors buy life insurance?

Life insurance can be a vital piece of a long-term financial plan for seniors and offer you peace of mind that your loved ones won’t get stuck with hefty end-of-life bills.

William Scott Page, CEO of LifeGuide Partners and author of "It's Never Too Late: Getting Older, Wiser, and Worry-Free in Our Golden Years,” says reasons that a senior would want life insurance includes:

• Estate planning
• Cover burial expenses
• Fund a loved one’s college expenses
• Replace lost income if you were to die

"The primary reasons I see seniors purchasing policies include still having debt after retirement, still earning outside income and needing to account for its replacement, their family not being self-sufficient without them, and to benefit their estate,” Page says. 

Consider that, even if you have substantial savings, an illness or medical expenses can deplete your financial reserves, leaving little behind for your family after you die.

"Life insurance for seniors can cover funeral, burial, and final expenses as well as pay for medical and credit card debt," explains Randy VanderVaate, president/owner of Funeral Funds of America.

Many older people also purchase life insurance as an estate planning tool to offset estate taxes.

"Seniors who have outstanding mortgages or loans may benefit from such policies. Also, those who are concerned with the unpleasant costs of death, especially if their heirs are not in a good financial condition to handle such an expense, may want to choose a life insurance policy," suggests Eric Estevez, owner of HLC Insurance Broker.

People under 85 often qualify for life insurance policies -- though the options are more limited than if you bought a policy at 40 years old. Poor candidates for senior life insurance include those with poor health and those aged 86 and older. These applicants will likely get denied coverage (depending on the policy) or be quoted exorbitant premiums.

Types of life insurance for seniors

There are several different types of life insurance products for seniors to consider.

Term life insurance

Term life policies are usually more affordable and offer a higher death benefit payout than permanent life policies. However, they’re only offered up to a certain age (often age 80), so many seniors may not qualify for term life.

Term life insurance policies have higher coverage amounts for lower premiums compared to whole life policies. However, term life policies only cover you for a period of time, such as 10 or 20 years.

Term coverage can be yearly renewable or level term. With yearly renewable policies, the premiums increase as you age. Level term keeps the premiums the same throughout the life of the policy. Level term premiums are often higher than renewable policies at the start of the policy since actuaries must account for the increasing cost of insurance over the life of the policy.

When looking for the best term life insurance make sure to consider whether you would prefer level term or yearly renewable.

"Term insurance is useful primarily for income replacement if the insured dies while he or she is working and has a surviving spouse or children who are dependent on that income," says Elinda Kiss, associate clinical professor of finance at the University of Maryland's Robert H. Smith School of Business. "This policy is best when there is a specific need, such as retirement debt that needs to be paid off. But it will not pay out if the policyholder dies after the term expires."

Whole life insurance

With a whole life policy, you can accumulate a cash value that can be used to pay for premiums in the future or borrowed against if you have a financial need. The premiums never increase, and the coverage never decreases or expires. But these benefits will result in higher premiums.

Whole life insurance policies are usually easier to get for seniors than term life insurance.

"Whole life insurance is primarily useful for avoiding taxes. The ability to accrue and borrow against the cash value has a drawback: The insurance company will deduct the amount outstanding from the death benefit," notes Kiss.

Permanent life insurance policies like whole life also allow you to add riders, which can help you while you're still alive. For instance, terminal illness riders may let you tap into your policy to help paying for medical expenses.

Guaranteed universal life insurance

Guaranteed universal life insurance offers affordable lifelong coverage with guaranteed death amounts and a possible return on your premiums if the policy accumulates cash value.

"These policies grant the ability to actively invest the policy's cash value, which can be great for those with the time to reap the return on interest. However, older people will not have time to have the investment grow," Kiss says.

"A guaranteed universal policy offers a death benefit and premium payments that will not change over time. Because guaranteed universal insurance has little or no cash value, it is cheaper than other types of universal life insurance,” Kiss adds.

Final expense life insurance

Final expense life insurance is geared to seniors who want to pay their end-of-life expenses like burial, cremation, medical, or estate costs. Your premium remains the same, and the policy doesn’t expire, but this insurance is more costly than term life insurance.

Final expense policies will likely only provide enough death benefits to cover final and funeral expenses. The full death benefit, usually $5,000 to $25,000, won’t provide income replacement for your beneficiaries. 

However, final expense life insurance is often no medical exam required life policies. Instead, you may have to answer a few health-related questions to get covered. 

"Be aware that the cost per $1,000 for this type of policy is very high because there are no medical questions required; therefore, healthier people may pay the same high rates as those who are not as healthy," cautions Kiss.

No medical exam life insurance

A guaranteed acceptance life insurance policy is suggested for seniors with pre-existing health problems. No doctor's visit or medical exam is needed to obtain a policy (although the life insurance company will review your medical and prescription records). 

On the downside, the coverage/payout is more limited than other types of insurance policies -- often maxing out at $25,000.

How much does senior life insurance cost?

Premium costs for a life insurance policy for older adults vary based on multiple factors, including:

• Policy type
• Age
• Health condition
• Death benefit
• Life insurance company

For life insurance companies, it’s all about risk.

"In general, the younger and healthier you are, the lower your premiums will be, although premiums for males tend to be higher than for females," says Estevez.

Brian Martucci, the Minneapolis-based finance editor for Money Crashers, says life insurance costs increase sharply with age.

"A new final expense policy might cost $2 or $3 per month for every $1,000 in coverage if you are a healthy 50-year-old, while a healthy 80-year-old can expect to pay $8 to $10 monthly for the same policy," he says.

Brad Cummins, owner and principal agent of Insurance Geek, says a whole life insurance policy for a healthy male senior may run between $1,000 and $2,000 for a $250,000 policy versus $900 to $1,800 for a similar policy for a healthy female senior.

How to buy a life insurance policy for seniors

As with any insurance policy, it's strongly recommended to shop around and request multiple insurance quotes from companies when buying life insurance. You can shop online, contact the insurance company directly or work with an insurance agent. 

Investigate the reputation and financial strength of each carrier by searching for their A.M. Best rating and Better Business Bureau rating.

"We recommend that seniors contact an independent life insurance agent who has access to many different carriers. This agent can pre-qualify you by asking health questions ahead of time and then shop around for you and recommend the best plan with the lowest pricing," says VanderVaate.

When it's time to apply, you may need to have a medical exam to gauge your health. Medical underwriting "will involve you completing a thorough health history questionnaire and undergoing medical record checks, plus a paramedical exam," Martucci adds. "No exam policies won't require a medical exam but may still investigate health history."

What is the best life insurance for seniors?

The best life insurance policy for a senior is one that meets their needs and budget based on age, health condition, affordability, and other factors. There are several different types of policies to choose from, including term, whole life, final expense life, and no medical exam life insurance. Each has its pros and cons.

Some of the top life insurance companies for seniors include Mutual of Omaha, AIG, Aetna/CVS, MassMutual Life, and Guaranteed Trust Life. Check out our Best life insurance for seniors to find out more.

To select the ideal policy and carrier, it's important to do your homework. Calculate ahead of time how much money you think your survivors will need to at least pay for your final expenses and any debts you've left unresolved, including a mortgage.

Consider your age and health condition as well. That can influence your policy options. For instance, someone with poor health may only be able to get a guaranteed issue policy with a small death benefit.

"Additionally, when comparing policies, look closely at the fine print in the policy language and any specified guarantees," recommends Kiss.

VanderVaate recommends opting for a policy that offers first-day coverage, which can trigger the lowest rates and highest death benefit.

"Seniors need to be cautious of no-health-questions-asked life insurance policies with a two-year waiting period, which will only pay for accidental death during the waiting period. If you die from an illness, your beneficiary will only receive the amount you paid plus interest, which typically equates to around 7% to 10%," he notes. "First-day coverage plans will get you covered on the very first day, and they will pay a 100% death benefit to your beneficiaries when you pass away."

How to get cheaper life insurance for seniors

Want to save money on a life insurance policy? Your best strategy is to shop around, compare rates, and lock in a policy at a more affordable rate now before you get any older.

"Don't wait to purchase your policy. It will only get more expensive with time," cautions Estevez. "Another way to possibly lower your premium is to decrease the death benefit or period of coverage. It also helps to preemptively take care of your health and avoid illness and disease."

Seniors may also save money on life insurance if they pay their premiums on an annual basis.

"Most life insurance companies offer a discount if you pay your premium yearly," advises VanderVaate.

Frequently asked questions: Life insurance for seniors

Should I go with a no medical exam policy?

A no medical exam policy may be ideal if you have pre-existing health conditions. That's because no medical exam or doctor's visit is required to get this kind of life policy. 

However, the coverage limits are lower than for other types of insurance policies and the carrier will charge a higher rate because they are assuming more risk.

Do I need life insurance after I retire?

Many experts recommend considering life insurance as a way to supplement your estate planning and provide for your beneficiaries -- who may need to at least pay off your debts and final expenses after you die.

However, if you have accumulated significant wealth and/or have no targeted beneficiaries, a life insurance policy may not be worth the costs.

What can I do if my life insurance has lapsed over 60?

If you had a term life insurance policy that expired after you turned age 60 or older, you may qualify for a new term, whole, final expense, or no medical exam life insurance policy, depending on your age, health, payout needs, and budget.

A term life insurance policy for seniors is more expensive than policies for younger people and you may be limited on the length of the policy. However, term life can be an option if you’re in your 60s and sometimes even in your 70s.

How much life insurance coverage do I need as a senior?

Life insurance can be increasingly expensive as you get older. Many experts recommend that seniors apply for just enough coverage to settle their expected final expenses and cover any debts that may present an immediate burden to their heirs.

"The amount of life insurance coverage a senior needs depends on three elements: the purpose they are buying it for, the amount for which they can qualify, and the amount they can afford," explains Page.