Life Insurance For Seniors – The Complete Guide

Wow, Senior Life Insurance in 2019,  Really?

If you heard life insurance was just for married people raising kids… Wrong!!

I am here to tell you, life insurance is not just for the “young folks.”  If you don’t have it right now, at least you came here with an open mind to check it out.

Having written a good number of life insurance cases for various ages in my career, I’d would argue that life insurance is just as, if not more important for seniors than “young folks.”

Seniors are planning for the inevitable, whether it is for creating an inheritance, estate taxes, a charity or just end of life expenses.

Ladies and Gentleman…Life insurance for seniors is here to stay.  It maybe more important than ever.

While most families raising children should have an appropriate amount of life insurance, there has been a developing mentality in recent years that people don’t need life insurance once their kids become young adults.  Why is that?  No offense intended, but in many, many cases, this is a highly debatable thought.  We need to remember what life insurance is all about and why people elect to purchase it in the first place.  Life insurance is meant to protect the financial value of a individuals life to another party called the “beneficiary.”  While that may sound generic…as it is, that is essentially what is happening.

So, how does life insurance help you as a senior?

In short, life insurance is meant to protect a beneficiary named in the policy, determined by the policy owner, from financial damage that can come from the loss of life.  Sometimes it is a loved one we protect, other times it is someone who is key to a business.  Ultimately, as a senior, you are protecting your loved ones by making sure that your death does not cause financial strain at a time when you can no longer do so.

So, as a senior, permanent life insurance is typically used as financial protection for our loved ones from our own inevitable death. 

Tough to think about and even tougher to act on.  I am with you.  But it is quite expensive to leave this world.  The average cost of a full funeral is roughly $10,000.  $11,000 according to the Huffington Post.  This does not include a grave or headstone.  Depending on where you reside will have some impact on the cost.  Have you determined what you would like your arrangements to be like?

Now, passing on a financial legacy to children is another common use of life insurance for seniors.  Some use it to fund a irrevocable trust or donate to a charity.  Some high net worth families may use it to cover hefty estate taxes…  Taxes their offspring would have to pay otherwise out of estate proceeds.  A properly named beneficiary(s) can receive tax free money that bypasses probate for a life insurance policy.

When we were all younger and “healthier,”  the odds were in our favor long term.  As a seasoned adult, we know that things change, the human body does wear out and all good things come to an end.  While certainly unpleasant to think about, seniors know it can and does happen, sometimes without warning.  With age comes wisdom and a realization that financial affairs need to be in order especially while on a fixed income.  While no amount of money will ever replace the loss of your life, it does remove some or all of the financial crisis that often surrounds death.

Seniors we work with typically mention they don’t want to leave their families in a financial mess. 

For many families, death is financially stressful or financially devastating.   Your not alone there.  A grieving family having to make life altering changes…most folks we speak with don’t want this to happen. Have you figured out how your family will cover all of the family expenses when you pass?  Will an income stream stop and/or will help around the house be needed?  Can your savings easily absorb the costs of a funeral, burial, outstanding final medical bills, a mortgage, credit card or an auto loan outstanding?  Do you want to pass anything onto your children or grand kids?

If any of this is unsettling…today, I hope to encourage you to take action.  Add those numbers up.  If you have a spouse, make sure each one of you is considered.  It is a very tough adjustment for many spouses to absorb responsibilities their life partner committed their abilities to.  Will health insurance coverage be lost?  Life Insurance for Seniors is a solid solution to protect your loved ones from the change in life that will unfortunately occur.  It is a universal truth and one we must accept and plan for, especially as a senior.

A take home point to remember…

Life insurance gives the policy owner a very affordable option to create an immediate estate (grow the value) in a tax advantaged package.  This also provides a tax free death benefit to their hand picked beneficiary(s).  In fact, there is no other legal way to create an estate at such a small cost. A properly documented beneficiary in the policy can allow the full payout to bypass probate court.  Monies are not lost in probate this way and just one reason why life insurance has been used for years as an estate planning tool.

If you’d like to get some additional information on how life insurance can be used as a estate planning tool, use this link here to get a better understanding of how and why it plays a major role in caring for your family and business.

What is the benefit of Life Insurance?

If you are going to be the insured yourself, the benefit would be that your family now has some degree of financial protection in place.  The extent of financial protection will be determined by a complete needs analysis in relation to the policy amount elected.   As a senior, many people elect to leave a legacy for their kids or grand children, while others are using life insurance to handle their burial expenses ensuring that their spouse or family isn’t left with huge financial challenges.   Some seniors with use life insurance to leave monies to the church or a charity.

Life insurance is a cost effective method for most to multiply their money into a tax free payment to family members, the church, a charity.  Some folk are retiring and want to protect their pension in the event they die prior to their spouse.  We call this pension maximization.  You know, there are clearly a lot of reasons people who are seniors or approaching those years need and/or want life insurance.  All of the former are just common uses of life insurance by seniors over the years.  Life insurance can also be used in additional ways beyond the scope of this post, very affordably.

Now, you may have heard about term life insurance or even owned it at one point of your life. 

Heck, maybe you still have coverage but it is nearing expiration and you are not sure what to do.  Working with seniors since the late 90’s, I can tell you that term life insurance is not a good all purpose senior product, by any means.  There is a  likely hood of it expiring before your loved ones needs it the most.  As such, I tend to discourage it.  Run from companies or salespeople selling cheap term life insurance.  It can bite you or your loved ones in the butt!!  Many seniors have purchase policies from big name companies based on term life insurance only to have them expire when they were needed.  Life insurance for seniors is not a guessing game!!

If you have a mortgage covered by term life insurance, than that is good.  Folks, make sure you are really working with a independent agent/broker professional who has lots of senior clients.  Term life is pushed on seniors because it is cheaper to own without concern to whether it will reliably get the job done right.  These pushers are just price salesmen with an insurance license.  They are abundant in call centers, big name insurance companies and even on popular websites.

Here is the problem with that.  People are simply living longer due to modern medicine.  However, the older we get the more our health deteriorates.  This all effects our ability to get the most affordable, adequate life insurance, if at all!!  Permanent Life Insurance is the way to go.  In a few select cases, a blend of term life and permanent life insurance can be the answer but I will not get into specific scenarios here.

We have nothing against term life insurance, just don’t put a round peg in a square hole.  Use it all the time in fact for people at a different stage of life.  My wife and I have it on each other as well.  Mine will expire in 2028.  My kids will be out of college, home paid off and no significant debts at that point.  While I am not spring chicken at age 50+…ssshhhh… the main use of the product is for the “young whippersnappers” as my former mentor and co-owner used to say.  He loved to use that phrase!!

Tip…Don’t be sold on price, purchase the right type of life insurance for your needs at the best price.

As a senior, I think you know that time is working against us all.  With age comes wisdom, right?  I’m not 21 now either.  We don’t have a crystal ball to know “our time” do we?  We can, however, make sure we have a good financial plan for our family to carry on without us.

While life insurance allows monies to be passed on tax free to your heirs as a legacy, it is often used to remove the financial stress that can follow the loss of life of a loved one.

Remember, your family will be grieving.  It is expensive to leave this world by most peoples standards.  Money will not be able to replace you, but we don’t have to leave those who matter the most in financial crisis to, right?  Do we want our family changing their lives or do we want to leave them financial support, love and concern even in our passing?  Life Insurance for Seniors is that answer!!

If you take the time to look into coverage for your loved ones, you will find your odds of your money being multiplied as a tax free payment to your family is another strong argument to purchase senior life insurance.  It is the only financial vehicle that can guarantee their financial needs are covered with proper upfront planning.

For many, senior or not, life insurance is very affordable when you work with a specialized, independent agent like Special Risk Life.

Guaranteed Universal Life Insurance For Seniors

For seniors who sometimes need a larger, but  still a permanent policy, a Guaranteed Universal Life policy (GUL) can be the answer.  This is also a level premium for life policy with a death benefit that will never decrease.  With its term life like premiums, but permanent coverage, GUL offers a very affordable alternative to whole life insurance.  These policies can be purchased to cover you to age 121.  This policy is strictly, death benefit only. With GUL, there is no cash value buildup in the policy.   By removing the cash value accumulation feature and providing a simple, pure life insurance protection plan, seniors can purchase coverage they will not outlive, at a more affordable rate.

Guaranteed Universal Life is sometimes called “No Lapse” Universal life as well.  The terminology simply means that the policy cannot implode as long as you pay your premium  These policies typically start with coverage amounts of $25,000 or more and are used for various purposes whether it be family legacy, charitable giving, final or end of life expenses, estate planning  and more.  For smaller amounts, a traditional senior burial policy based on whole life insurance is the more common solution.

Life Insurance for Seniors Over 70

If you are wondering if being in your 70’s means life insurance is an not something you can qualify for to protect your loved ones, think again.  While it may not be as easy to obtain as when you were a younger man or woman, plenty of top notch insurers gladly offer policies designed for people your age.  Yes, with ease of application and affordably.  Even those with terminal illness can obtain a guaranteed issue whole life insurance policy from Gerber Life or AIG, two of the most competitive companies who issue guaranteed issue whole life insurance.  Now, that is not the first recommendation we make to our clients as Guaranteed Acceptance coverage is considerably more costly than the alternatives and has a “waiting period” built in.  The waiting period limits policy benefits for the first 2-3 years (depends on the insurer) for natural death.

Often times, seniors are just looking for coverage for their end of life expenses and need burial or final expense policy.  These are most often simplified issue products with no medical exam required and less health questions than a traditional, fully underwritten policy.

Why, sometimes seniors in their 70’s have had some considerable health troubles and/or just don’t need a large policy making this a very affordable whole life insurance option.

Some of the Top Life Insurance Companies For Seniors

• Assurity

With whole life insurance coverage for seniors from Assurity Life, your coverage would begin on the day you sign the agreement. Prior to age 65, you can apply for up to $50,000.  After your 65^th birthday, the max is $25,000.  Policies of this size are most appropriate for final expenses.

With Assurity, expect to answer a few health questions before the policy will get underwritten. If you are looking for life insurance coverage that will cover your burial, end of life/final expense needs, then a policy from Assurity Life is a very good option.

• Banner Life Insurance

Banner life insurance seems to always be on our roundup top life insurance companies. Banner is an excellent company for sub-standard risk clients (health conditions), offering some of the most competitive life insurance plans, premiums and coverage for seniors.

• Fidelity Life Insurance

We recommend Fidelity Life Insurance to a lot of seniors depending on the specific need and application. We also consider Fidelity Life Insurance to be one of the “more serious” no medical exam life insurance companies. Fidelity’s “Hybrid” term life insurance policy allows clients to get life insurance coverage in less than 48 hours. This policy offers 1/3 of your coverage as term insurance and the remaining as accidental death insurance which creates additional affordability. You may opt to take a medical exam up to six months after applying.  If you pass the medical exam you can change your policy into a traditional policy.  This is recommended.  If for some reason you don’t fare well during your medical exam, you are still allowed keep your existing policy.

• Foresters Life Insurance

Foresters Life Insurance is not a big household name like a few other companies on this list, but it provides one of the best life insurance policies and coverage for seniors. If you have a really rocky medical history, Foresters will stay give you strong consideration as a client.  Competitive rates for those on a fixed income…something that is important particularly after retirement.

• Gerber Life Insurance

The baby food company has an affiliate, Gerber Life Insurance Company.  They are most famous for their children and youth life insurance policies. Gerber Life Insurance is on our list of most top-rated insurance companies for senior citizens. However, they deserve it!

Gerber Life Insurance offers a guaranteed issue, no health question and no medical exam life insurance policy for the elderly who are in the poorest of health.  When a senior is uninsurable due to a pre-existing condition, Gerber Life Insurance still offers coverage. This product is a savior if you have a terminal health condition and expect to live 2 + years.

For more, see our Gerber Life Review.

• Lincoln Financial

Catering to clients 70 and older, Lincoln Financial senior life insurance coverage offers whole and term life insurance policies for seniors even over 80.  The company has liberal standards for those with higher body mass ratings.

Additionally, the company offers competitive senior life insurance rates and products.  These offering often rank in the top 3 in cost of coverage for those age 70 and up.

Lincoln Financial allows greater limits for blood pressure, cholesterol and diabetic life insurance applications…for seniors 70 and up.

Be aware that Lincoln Financial will not consider any applicant if he or she has not been seen their personal physician in the past 12 months.

• Minnesota Life (Now Securian Financial)

Securian Financial, formerly Minnesota Life ranks at the top for senior term life insurance rates in a lot of categories.  The company seems to be focused on making life insurance affordable for seniors by having several different rate classifications and taking applicants to even age 85.  Securian also offers whole life for those seniors looking for guarantees.

• North American Company

Also among the best life insurance for seniors is North American Company. North American has a rock solid A+ financial rating from, A.M. Best. Most notably, North American is very good for life insurance age 60 and up.  The have good products and very, very competitive rates on older seniors.

• Prudential

Prudential has great brand, big company recognition.  It has been earned over lots of years of marketing and being pretty easy to work with.  Prudential Life Insurance policies are very competitive were many other companies balk. We can recommend them without reservation for anyone, but most often the following high risk life insurance situations:

• You are a tobacco user
• You need diabetic life insurance or…
• Are a Cancer survivor
• This makes Prudential a unique life insurance company because they have special underwriting guidelines that can work in your favor.
• Transamerica Life Insurance

Transamerica is the senior term life insurance company. The company consistently offers some of the best whole and term life insurance for seniors 70 and above.

Unlike some of the other big name competitors, Transamerica proves to work well with seniors offering what the other companies avoid.  The company issues term life insurance coverage to seniors over 80.  This is not common place at all.

Transamerica underwriting of senior allows for improved rates if you are 71 or older and have a blood pressure reading of 145/85.  You can likely apply for the best rate class. Additionally, you will still be able to get the best rate if you have up to 5.5 cholesterol ratio. Many competitors will only allow a cholesterol ratio up to 4.5.

Finally, Transamerica has some of the lowest rates for seniors over 75, making it a premium company for our most “seasoned” clients.

Life Insurance for Seniors:  The Terms You Should Know

Yes, there are a lot of different life insurance terms or lingo out there – death benefit, face value, burial or funeral expense policy, final expense, guaranteed acceptance. In this section we will  make it easier by explaining what those all mean.  It should help you to find the policy need.

Let’s start with:

Survivorship Life Insurance

Survivorship life insurance, sometimes known as second-to-die life insurance insurance, is actually a joint life insurance policy between two people.  Where it’s especially beneficial… if you were to pay hefty estate taxes (estate value 11 million + as married).  This helps your family or heirs inherit your estate and avoid liquidating your assets.  The key is…it doesn’t pay out until the second person on the life insurance policy is deceased (hence the second-to-die insurance coined name).  Example – husband dies at age 75 while Mom lives another 5 years until passing.  At this point, estate taxes become due and the Suvivorship Life Insurance policy pays out tax free money to the children to cover those costs so the estate is not depleted from those expenses.

Death Benefit

The term “death benefit” certainly sounds grim, but in the context of life insurance, it refers to the amount of money that any beneficiary(s) will receive from a life insurance policy when the end of life of the insured is reached.

Face Value

Face value is the amount of money your beneficiary would receive when the policyholder passes away. In other words and in the context of the policies we’re discussing in this article, the face value is the death benefit of the policy.

Guaranteed Acceptance Life Insurance

For some senior citizens, guaranteed acceptance life insurance maybe their only option.  A very serious health condition that is uninsurable thru health questioning and/or MIB hits (Medical Information Bureau will make it necessary.  You should never apply for this type of coverage until you have spoken to a high risk life insurance specialist!!

As suggested, it’s much easier to obtain than other types of life insurance, meaning that if you have poor health, you can still qualify for this type of life insurance.  There are little to know health questions, depending on the insurance company.  This is certainly not the case with most life insurance application either.

Final Expense Life Insurance

Final expense insurance, otherwise known as a burial insurance policy, is meant to cover end of life expenses after the passing of the insured.  These are smaller policies, usually $25,000 or less.  Like guaranteed acceptance life insurance, these policies can help pay for outstanding bills, final medical expenses and funeral costs.  Final Expense policies are meant for people who do not need a larger policy, yet need permanent coverage that promptly covers the costs of the end of life expenses for their loved ones.

Final Expense Whole Life insurance is more expensive per thousand than other forms of life insurance.  The key to remember here…it is easy to qualify for, permanent coverage and comes in smaller amounts.  Limited health questions and dependable in nature, this is a common, go to product that seniors may turn to to avoid the hassle of a medical exam.  This is turn allows you to buy only what you really need, want and afford.

Final Expense vs Burial Insurance Lingo – “Final expense life insurance” may ask a few more health related questions in order for people to qualify.  “Burial insurance” can sometimes insinuate pre-existing conditions or health issues or that it may be easier to qualify for.  Guaranteed Issue is usually called a burial policy.  However, the terms can and are frequently used interchangeably.  Remember, everyone’s circumstances are quite different.  You should consult with an independent life insurance pro to help you find the right product before ever applying.

Term Life Insurance

A term life insurance policy means that beneficiaries receive a death benefit/face amount of the policy if the insured passes away during that specific period of time (the term).  This is temporary coverage and is usually the cheapest form of life insurance.

Whole Life Insurance

This is a permanent life insurance policy guaranteed to last your lifetime.  It develops cash value over a number of years which you may borrow from if you so choose.  It tends to be the most expensive type of coverage per thousand of coverage.  Whole life policies will endow at age 100 and payout the death benefit regardless of the insureds death or not.  Level premium and death benefit, cash value accumulation and the ability to borrow against the cash value in the policy are the hallmarks of a whole life policy.

Guaranteed Universal Life Insurance

Guaranteed Universal Life insurance (GUL) will be the best value of all life insurance types.  Like Whole Life Insurance, GUL does provide a permanent, guaranteed death benefit but at a much more affordable premium; comparable to term life insurance.  The premiums are level for life and the death benefit will never decrease.  GUL policies are designed for seniors who typically need $25,000 or more in life insurance.  While there is no cash value accumulation like a whole life policy, the affordable, permanent protection offers the best value to those who need the most dependable coverage.  As a general rule, for most senior citizens, guaranteed universal life insurance is the go to product for life insurance needs if you need coverage beyond the cost of a funeral and burial expenses.

What is No Medical Exam Life Insurance?

No medical exam life insurance means that you can skip a visit to the physician’s office and still qualify for even permanent, whole life insurance policies. For many seniors, no medical exam coverage is an option because it saves you time and effort. In many cases, obtaining a no medical exam life insurance policy from Special Risk Life can go from application to approval in 24 hours. Depending on your personal situation, you may still be asked medical-related questions during your application process.  This is financially to your advantage.  The more questions and information, the lower your cost of ownership should be.

Conclusion

In our experience, life insurance is very important to a family’s financial well being whether raising children or not.  I have lost track of how many life insurance applications we have processed for senior citizens.  It is quite commonplace in reality.  Seniors buy life insurance and keep it.  They know the coverage will inevitably pay out and take care of their families when they can no longer do it.  It is one of the only insurances that I can say will pay benefits.  Of course, this is provided your coverage is properly designed to offer permanent protection.  This is absolute key folks.  Temporary (Term) insurance is fine to pick up mortgage or other loan expenses that end during a specific period but should not be put in place with hopes it will cover you till you die.  We don’t have a crystal ball to know our time.  While there are companies offering extended term life insurance now days, guaranteed universal life insurance is a better option being a permanent form of coverage.

The key to saving money on life insurance for seniors is to buy sooner than later with company that views your unique health status favorably.  The younger and healthier you are, the better financial move it typically is.  Premiums are higher each year you put the coverage off and as health declines.  Do not assume you are saving money by not paying for life insurance.  Doing this and risking a major health condition or worse yet, unexpected death is playing with fire.  Rates can easily double over a change in health status.

Whether you are the “breadwinner” or the “housekeeper” it does not matter.  You need to protect your family from the inevitable financial woes that accompany the value of your life.

Be careful on who you work with as senior. 

There are some high paid people on television hired as a paid endorser, retirement organizations pushing high priced products that are frequently not in your best interest. 

There are also many young and/or eager agents pushing “cheap, term life insurance.”  It is a bandwagon mentality.  They just have not been around the block to know it isn’t necessarily the primary life insurance for seniors.  Never was and never will be, cheap or not. 

Questions?  Give us a call – 800-598-6445. We are always here to help and never any obligations.  Feel free to comment below if the spirit moves you.