Whole life insurance for seniors over 75

Your reasons for buying senior life insurance should guide your decision on the types of life insurance to consider. Here are some tips for seniors buying life insurance.

Avoid graded death benefit life insurance

It’s best to have life insurance that pays the full death benefit from day one. Therefore, you’ll want to consider a traditional life insurance policy and avoid a “senior policy” that has graded death benefits.

With a graded death benefit policy, your beneficiaries won’t get the full death benefit if you pass away from a non-accident cause within the first two or three years of owning the policy. For example, if you die from pneumonia a year after buying life insurance, a graded death benefit policy will pay your beneficiaries only a refund of the premiums you paid with some interest. If you die in an accident, such as a car crash, these policies will typically pay the full death benefit any time.

Don’t be rushed into a life insurance purchase

Financial predators often focus on seniors. They may try to get you to purchase unnecessary coverage, or a more expensive policy than you need. Be wary of anyone who tries to rush you into making a decision or discourages you from discussing a proposed policy with a family member or trusted advisor.

Don’t be sold on policy projections that aren’t guaranteed

Life insurance policies that can build cash value will have “policy illustrations” that show projections for costs and cash value over time. For some types of cash value policies, not all amounts shown in an illustration are actually guaranteed.

“Beware of ‘advisors’ offering policy reviews comparing non-guaranteed premiums, cash values and/or death benefits for some limited number of products,” says Barry Flagg, founder of Veralytic. These sales practices are now considered “misleading,” “fundamentally inappropriate” and unreliable by the financial, insurance and banking industry authorities.

“Insist that quotes include year-by-year disclosure of costs, often referred to as detailed expense pages or policy accounting pages,” says Flagg. Work with an advisor who will explain what’s guaranteed and what’s not.

Insurance agents and advisors should be able benchmark a policy’s internal policy costs and historical performance against the insurer’s peers, just like you do for other assets in your portfolio, says Flagg.

Get professional help

Because seniors are likely to have health issues, it’s especially important to work with a qualified life insurance advisor who can help you compare policies from multiple insurance companies.

Your advisor should review your medical history and send informal (anonymous) queries to multiple insurance companies to determine the best available rate for you. By doing anonymous inquiries, you’ll save time and avoid any possible application denials.

Don’t base your decision solely on cost

Price is a critical factor when choosing a life insurance policy, but you shouldn’t base your decision only on cost. Check out financial strength ratings for the insurers, such as AM Best ratings.

Research the available life insurance riders for the policies you’re considering. Life insurance riders allow you to add on coverage. Some riders let you access your death benefit while you’re still living for qualifying circumstances, such as accelerated death benefits for chronic or terminal illness, and long-term care riders.

Once you’re comfortable with a list of insurance companies, you can get quotes to find the best senior life insurance policy for you.

When it comes to deciding whether seniors need life insurance, it’s important to consider the reasons for purchasing a policy. If you have a family or partner that depends on your income or retirement to cover living expenses, then a life insurance policy may help provide some financial protection for them after you die.

Also, if you rely on your Social Security payments for a portion of your lifestyle needs in retirement, it may make sense to take out a policy.

“The surviving spouse will lose the smaller of two Social Security payments and expenses don’t necessarily drop by half when a spouse dies,” says Howard Pressman, a certified financial planner in Virginia. “If the loss of income is greater than the decline in expenses and investments can’t make up the difference, life insurance may be needed.”

Other reasons to consider life insurance: if you want to use the proceeds to help beneficiaries pay possible inheritance tax, or if you have a business and want to use the death benefit to help your successor purchase it.

A final expense type plan, which generally has a lower death benefit of between $2,000 and $50,000, might also be useful to help your loved ones cover funeral and other expenses after you’ve died. According to the National Funeral Directors Association’s (NFDA) 2021 Member General Study Price List, the median price of a funeral was $7,848 and cremation costs were $6,970.

However, keep in mind that life insurance policies cost more the older you are and might be pretty expensive when you’re in your 60s. The price for a 20-year term policy with a $1 million death benefit from Prudential for a female in the Standard Plus risk class jumps from $308.44 per month at age 55 to $957.69 per month at age 65. Any health conditions you have may increase your premium or exclude you from certain policies. Also, the number of policies available as you age decreases. For example, State Farm’s Return of Premium Term Life policy isn’t available to applicants over the age of 60.

So consider your options before making your decision. You may want to seek the advice of a certified financial planner or other financial professionals to best plan for your specific needs.

What should seniors look for in a life insurance policy?

Start by clearly identifying the purpose of the insurance policy. For example, if it’s to ensure your survivors can pay off a mortgage, then a term policy could be the right fit. Before you buy permanent life insurance, make sure to do the math.

Jeff Rose, a certified financial planner in Nashville, indicated he has had retired clients who wanted to leave a nice inheritance for the kids and grandkids, “but when they learned the cost of the insurance and realized how it would affect how they lived during their retirement, they decided against it,” Rose says.

Understand that insurance for seniors costs more. “How many months of premium payments would it take to reach the death benefit amount? It may be better to save the amount you would have paid towards the life insurance premium,” says Niv Persaud, a certified financial planner with Transition Planning & Guidance in Atlanta. She suggests looking into a long-term care rider, since Medicare doesn’t cover that kind of care: “It’s the expense that depletes one’s savings.”

For more information on choosing the best life insurance company read our guide, How To Buy Life Insurance.

How much does life insurance for seniors cost?

Even policies for people in the same demographic and risk class will vary in pricing. For a 65-year-old female in the Standard Plus Risk category with a $1 million, 20-year term policy, premiums from Transamerica were $827.90 per month, while premiums from Guardian Life were $375 per month for the same person and policy. Keep in mind that many companies may not issue or offer a 20-year term policy to someone who is 65 years old.

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