Senior Term Life Insurance

Many people assume that term life insurance is best suited for young families with children. Term insurance, however, can also be a good choice for seniors aged  55 and over. A term policy, which is in force for a set period of time, is inexpensive and uncomplicated. The term can be for as few as 5 years or as many as 20.

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Reasons Seniors Need Term Life Insurance

The reasons seniors may need to purchase term life insurance are varied. Some may need to supplement a permanent life policy. Others may have lost life insurance coverage with the loss of a job or retirement. Still others may want to ensure that a spouse or partner will have enough cash to cover funeral and final expenses.

For those seniors over the age of 65, a 10-year-term policy with the option of converting to a permanent life policy may be the answer. A new term policy will more than likely be the least expensive option, and the ability to convert it  to a permanent policy will ensure that coverage is then kept for life. Seniors seeking to renew a term life insurance policy, however, may want to consider  purchasing a permanent life policy, as it will typically be less expensive than a renewed term policy.

When is Term Life Insurance Best for Seniors?

Most insurance companies do not renew term life insurance policies after the insured reaches age 75. Therefore, seniors interested in term life insurance are usually advised to purchase a term plan prior to age 65. But, depending on the reason or reasons for the purchase, a term life policy can be the best choice.

Term life policies are the least complicated form of life insurance. They are best  for seniors who neither need nor want to build cash value, or for those who are not looking for the tax-deferred growth provided by a whole life policy. And, while a permanent whole life policy will provide a savings feature against which the insured can borrow, there are tax consequences to the income generated by a permanent life policy. For this reason, seniors are always  advised to meet with a licensed insurance agent and tax professional prior to  purchasing any insurance product.

When is Permanent Life Insurance Best for Seniors?

Seniors aged 75 and over who do not have the option of purchasing a term life insurance policy can opt for a permanent life policy. Permanent life, which remains in force for the life of the insured provided premiums are paid according to the terms of the contract, provides an additional level of security as whole life creates a cash reserve as well as paying a death benefit.

Like the death benefit paid on a term policy, the death benefit paid out on a permanent life policy can also be used to pay funeral and final expenses such as a mortgage or credit card bills. Unlike term insurance, however, a permanent policy can provide income for a spouse or beneficiary. A permanent policy can also be obtained to provide coverage until age 100. In addition, the built up  cash value of the policy can be used to provide an income stream to supplement a pension, savings and social security benefits.

In fact, for seniors with health issues such as high blood pressure or diabetes, a permanent life policy may be easier to qualify for than a term policy. When considered from the insurance company’s point of view, a term policy presents  more risk to the company than a permanent life policy as the insured gets  older. When a senior purchases a term policy, he or she is only risking the  monthly premium in exchange for a beneficiary receiving the death benefit. With  a permanent life policy, however, the insured assumes a larger portion of the  risk with higher premiums that are life-long.

How Seniors Can Find the Best Insurance Policy

While choosing the right life insurance product is important at any age, it is  especially important for seniors. Term life insurance will come with lower  premiums, but not with the cash-building feature. A permanent life policy will  be in force for the life of the insured, but the premiums will be more  expensive.

The key to senior term life insurance is to make sure the policy is in place prior to a health problem that may render the insurance unaffordable. It’s also  possible to purchase a life insurance policy that does not require a health  exam. While this type of policy provides the same types of benefits as a policy that requires a physical and blood work, the premiums can be significantly  higher.

A guaranteed acceptance life insurance policy is one such type of plan. In exchange for premiums that may be higher than a typical policy, the insurance company guarantees acceptance of the insured. The insurance company also guarantees that the death benefit will be paid in full, unless the insured dies of natural causes within the first two years of the policy. In this case, a smaller, limited death benefit is paid. But, this kind of policy ensures that even seniors with existing health problems can qualify for life insurance.

Therefore,  seniors looking to either renew an existing term policy or purchase a new one should first determine the amount of money that can comfortably be spent on monthly premiums and the amount of the death benefit. For seniors on fixed incomes, or for seniors not particularly interested in purchasing life insurance coverage  as an investment vehicle, a term life policy is usually a wise choice. A term policy purchased by a senior that takes into account the cost of the premium  and the death benefit, should feel comfortable knowing that his or her  beneficiary or beneficiaries will be left with enough money to cover remaining  expenses. Seniors with grandchildren or even great grandchildren for whom they  would like to leave money for college or the down payment on a first home, can  also do so with a term policy.


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