Term life insurance is a great way to protect your loved ones; you pay premiums for a set period of time, and if the worst happens (you die), your family gets paid a death benefit to cover expenses like a mortgage and college. If you don’t die by the end of the term, you get to stop paying premiums.
Also, you didn’t die. It’s a win/win.
A lot of people think they don’t need life insurance because they’re too young. Even though you can save money in the long run (because your premiums will be set at a lower cost when you’re younger and healthier), if you don’t have beneficiaries, debt, or a lot of expenses, you might decide to wait until you’re older to apply for term life insurance.
But that raises the question: can you ever be too old to get term life insurance?
When you do and don’t need term life insurance as a senior
There are times when buying term life insurance doesn’t make sense when you’re a senior.
One such scenario is when you don’t have beneficiaries that would rely on the death benefit if you were to pass. Term life insurance is income replacement: your beneficiaries need it because they’re used to your income coming to pay for things, and when you’re dead, it’s harder to get paid.
But by the time you’re a senior citizen, in addition to getting great discounts at fast food restaurants, you also probably don’t have as many financial obligations to others as you once did. Your mortgage might be paid off. Your kids are out of college and you don’t have to worry about student loans – yours or theirs – anymore. Your lifestyle traditionally calms down as you get older and your beneficiaries aren’t relying on a death benefit to cover large expenses, so taking out a term life insurance policy isn’t worth the cost of the premiums.
It could also be that even if you do have expenses, you’re covered in other ways. Your other savings, like retirement investments in the form of IRAs or 401(k)s, could be reaping the rewards of decades of compound interest, meaning that you can live out your golden years in self-funded bliss.
Still, there are times when, as a senior, you’d want to have life insurance. Your beneficiaries may not need expenses covered from the death benefit of a term life insurance policy, but maybe you want to leave an inheritance for your kids and grandchildren. Instead of worrying about your retirement investments being enough for you to live off of and there still being enough leftover to leave behind, the death benefit from a life insurance policy can help.
Similarly, if you don’t want to leave an inheritance behind for heirs you can use the death benefit as an endowment or charitable gift for a non-profit. Naming an organization as the beneficiary means that you can continue to give to causes you care about, even after your death.
You can also use a death benefit to keep your family from paying various expenses when you’re gone. Besides funeral expenses (which, alternatively, can be paid with a specific product – final expense insurance – described below) estate taxes can be an unexpected cost for your family. Not everyone will find themselves in a position where their estate is worth so much that the taxes become prohibitive, but term life insurance death benefits can be used to pay those taxes if need be.
Getting term life insurance as a senior
Okay, so the first question is whether or not you need life insurance as a senior. Assuming the answer is yes, the next obvious question is whether or not you actually can get it.
The short answer to this one is yes, but the longer answer is yes with caveats.
Age plays a huge role in the cost of your life insurance premiums. Basically, the older you are when you apply for life insurance the more your premiums will cost. You’re typically in worse health, and you can’t offset your older, more expensive years with younger, healthier years when you’re less likely to die (and therefore pay lower premiums).
There can be scenarios where you’re too unhealthy to insure because you’re too much of a risk for an insurance company. And even if you can be insured, additional tests like EKGs and cognitive tests can make it feel like you’re jumping through hoops.
If you need term life insurance, and if you can get it, make sure you’re getting the right policy. Senior citizens don’t need 30-year policies, so look for shorter terms. Many insurers offer 10- or 15-year terms, which may cover the timespan you’re looking for.
Some insurers may even offer shorter terms. State Farm, for example, has 5-year term life insurance policies. Keep in mind, though, that these will likely have more expensive premiums than longer-term life insurance policies.
You can also look for senior-specific plans. AARP offers term (and permanent) life insurance for members ages 50-80 through New York Life Insurance Company. Because it’s a group plan, it may be cheaper than if you try to find coverage on your own.
Alternatives to term life insurance for seniors
Finally, there are other ways to get insured besides term life insurance if you’re a senior. Keep in mind that term life insurance is usually your best option, because you’ll get the best coverage at the cheapest cost. But it’s nice to have options!
Even though you won’t have as many expenses when you get older, one that will always be looming is funeral costs, which are often north of $8,000. Final expense insurance is a way to pay specifically for funeral expenses. If you’re looking for an easier way to get life insurance, guaranteed life insurance will cover you as long as you pay the premiums, and simplified life insurance will allow you to apply for life insurance without going through a medical exam.
Again, these come at a cost (literally) so investigate your term life insurance options – and if you even need life insurance at your stage in life – before you dole out for costly premiums with other insurance types.
If you’re a senior looking for term life insurance, you certainly have options out there. PolicyGenius’ term life insurance company reviews show details for policies from some of the biggest life insurance companies – including the term limits available so you can get exactly the coverage you need. The most important thing to do is take an accounting of your financial needs to make sure you need to be paying for term life insurance, and doing research to get the right product for you.