Understanding life insurance for seniors

Life insurance needs may be different for older adults. After the age of 65, your personal insurance needs, family responsibilities, and budget may change. Help ensure your life insurance better fits your current and future needs. Learn more about the three key factors to consider when purchasing life insurance as a senior.

Factor 1: What type of life insurance works best for seniors?

The type of life insurance that works best for seniors is the policy that meets their family’s specific needs and fits in their budget. Having any type of life insurance is often the best option.

Term life and whole life insurance are the two most common types of life insurance. Both term life insurance and whole life insurance have benefits for seniors. You may want to consider your individual circumstances and budget when choosing between term life and whole life.

Term life insurance provides coverage for a specified amount of time. Policy holders select the amount of time they wish to be covered. Term life insurance may be ideal if you are on a tight budget, as the premiums are generally lower than other types of life insurance. That said, term insurance policies may not be renewable after a certain age and may not be available to applicants over a certain age. While some term policies could cover you past age 80, many end earlier and may cost so much that they no longer make financial sense.

If your term life insurance policy is nearing its end, you may have the option to convert it to a whole life insurance policy. This is important because you may want to avoid letting your policy expire. Most insurance companies can convert your term life insurance to whole life insurance, but keep in mind whole life premiums are often more expensive than those for term life.

Whole life insurance is designed to provide coverage for life. As long as the payments are made on time, the insurance will remain active. This provides coverage that may be important to older adults. Whole life insurance is generally more expensive than term life coverage, so seniors will want to consider cost when selecting a life insurance policy.

Whole life insurance may also build cash value over time. If you have built up enough cash value, you may be able to borrow money from your policy and use it towards retirement, family emergencies, or other expenses. Remember, that in this case you will have to repay the money along with interest on the loan. Your insurance company will add that interest payment to your regular payment for the insurance (the ”premium”). If you repay the loan, the amount of money your loved ones receive after your death is unchanged. But if you still owe money to the policy at the time of your death, it will be subtracted from the amount of the death benefit your loved ones receive. There are also options to cash out all or some of the cash value of a policy.

Factor 2: How much life insurance should seniors get?

How much life insurance you purchase is largely dependent on what you want to provide for your loved ones when are no longer around. Seniors should think about what they want the policy to cover when calculating how much life insurance to get. This will depend on your family’s needs and your personal finances.

For instance, do you have young children or grandchildren who you want to help through school? Do you have adult children who still need substantial assistance? Does your home need major repairs that you would like to help your heirs make? Life insurance may help seniors address these diverse needs.

On the other hand, if you have heirs who are financially comfortable or few or no heirs, you may only need a small life insurance policy to cover your funeral expenses.

Most insurance companies have options of different size policies, so you can specify the exact amount of coverage you would like.

Factor 3: Should seniors include additions to their life insurance plan?

Additional benefits can be added to most life insurance plans. These are called riders.

One rider that may be of interest to seniors is the accelerated death benefit rider. This will allow policyholders to receive part of their insurance’s death benefit while still alive if they are diagnosed with a fatal condition. This may help family members cover the cost of caring for you.

Some life insurance policies also offer long-term care riders. This allows policy holders to use the policy’s death benefit to pay for long-term care in an assisted living community or nursing home. Given the enormous expense of long-term care, it may be a sound decision to consider long-term care riders if they are available. It is important to understand that long-term care riders are NOT the same as long-term care insurance, which is a separate policy designed to cover only long-term care costs.

Finally, some companies offer spousal riders for spouses who do not have separate insurance policies. This type of rider will pay a small benefit in the event that the spouse of the insured passes away. If your budget allows, it may be better to get a full policy for both spouses, but a rider is frequently a more affordable option that is also worth considering.

The need for life insurance may continue throughout your life. No matter what age you are, it is natural to want to help care for your family.

Find the life insurance policy that could be right for you and your family today. Start by exploring life insurance policies for seniors by getting a quote from TruStage™. The process only takes a few minutes and can help you meet the needs of your family today and in the future.