It’s not uncommon when you reach a certain age to start thinking about your finances and what you’ll leave for your loved ones when you pass away. If you have worries about costs that your family will need to cover after your death, are searching for a way to leave a legacy to your heirs, or are exploring retirement savings options, then a life insurance plan for seniors could be a great fit. You’ve probably heard that it can be difficult or extremely expensive to get a life insurance plan when you reach your senior years, while it is true that your life insurance options reduce when you get older it doesn’t mean that you won’t have access to affordable plans and great coverage.
Why Seniors Should Consider Life Insurance
When you’re young with a large amount of financial responsibilities enrolling in life insurance is an obvious choice, but the reasons may not be as clear when you’re nearing retirement or newly retired! So, why should seniors choose to purchase a life insurance plan? There are a number of reasons seniors take out a life insurance plan, but three common ones include:
- Covering expenses caused by their passing such as funeral costs or estate taxes
- Topping up retirement savings for their spouse to help cover any wait for social security benefits to kick in
- Ensuring that they leave a legacy to loved ones or their favorite charities
Life insurance allows you to plan ahead for these situations by paying an affordable amount towards coverage each year. The cash lump sum provided by a life insurance death benefit is a simple and effective way to ensure that you leave the money your family needs to be financially secure after your death. If you’re not sure how much you’ll need to leave for your loved ones you can complete a simple coverage needs analysis.
Understanding Your Life Insurance Options
Life insurance falls into two main categories, term and whole life. Term life insurance is a type of life insurance policy that provides coverage for a fixed length period such as 10, 20, or 30 years. These plans offer extremely affordable coverage when you’re young but can become more expensive to purchase later in life. This is because term policy prices are based on the risk that the policyholder will pass away during the plan term, when you’re young and healthy the risk is low, but as you age the risk increases. Whole life insurance plans don’t have a fixed length and provide coverage for life, this means that the plan is guaranteed to pay a death benefit to your loved ones after you pass. As the plan is expecting to pay a death benefit the premiums will be higher than term policies. Seniors have access to a range of whole life plans.
How Your Age Affects Life Insurance Availability
One of the most common questions we hear from seniors exploring their life insurance options is, “am I still eligible for coverage?” The simple answer is yes, but you’ll need to compare multiple plans to find the right coverage. Your age when you apply for coverage plays a significant role in determining both your policy eligibility and the cost of life insurance coverage. Certain types of plans have age cut offs, which means that once you reach a specified age you will no longer be eligible to apply for that plan. For example, term life insurance policies commonly have age limits that depend on the length of the policy. So, if you want to apply for a term plan when you reach your senior years you may be restricted to a certain length of plan, however be sure to request quotes from multiple carriers as length availability can vary by insurer. Whole life insurance can be available much later in life than term policies with plans, such as final expense coverage, designed to meet the changing coverage needs of seniors. Again it’s important to compare quotes to find the best coverage option.
Factors That Impact Policy Price
Life insurance premiums are influenced by a number of factors such as your age at application, your health, the type of policy, and the coverage amount. The insurer will use this data to calculate your life insurance policy premium cost. When you reach your senior years two of these factors play a significant role in determining plan availability and eligibility: age and health. We briefly touched on how your age at application can impact your eligibility and cost above, but as age plays such a significantly role in pricing we’ll cover it in more detail here. So, why is age so important? Insurers need to balance the risk of issuing a plan by calculating the right premium. So for example, if you apply for a 10-year term plan in your 30s there is a low risk of the insurer needing to pay out on the policy and the premiums will be low. If you apply for a 20-year policy later in life the risk to the insurer increases and so do the premium prices. For whole life insurance pricing works in a slightly different way but age is a still important. The insurer will determine the cost of coverage and then divide the expense by the number of years the insurer predicts the applicant has left to live. So, for older people the cost will be spread over fewer years and result in a higher annual premium cost.
This leads on to the applicant’s health and how it affects premiums. Serious health issues can often increase the risk of the policyholder passing away early, which in turn increases the risk that a term policy will need to pay out or a whole life policy will pay out after a shorter period. However, insurers expect seniors to have preexisting health conditions so although you may pay slightly more for insurance you will still have access to coverage!
Finding Affordable Life Insurance For Seniors
Securing an affordable life insurance plan when you’re in your 60s can often feel a little overwhelming! However, by following one piece of advice it’s easy to find the best option: compare policy quotes from multiple insurers. When you hit your 60s it’s incredibly important to compare plans and quotes from many companies. Insurers often have different eligibility guidelines and pricing policies, this means that plan availability and premium costs can vary greatly between companies. Comparing quotes allows you to find the best coverage options and secure affordable prices, even if you have preexisting health conditions.
IntelliQuote provides an online quoting platform that lets you compare quotes from many of the best-rated insurers in the US. Get instant quotes for life insurance for seniors by answering a few simple questions, today!