Life insurance is one of the most trusted ways to provide for loved ones after you’ve passed. But deciding which policy is right for you can be challenging.
What kind of life insurance should you have? How much is enough? What's the best life insurance to have at your age?
Life insurance for seniors is different from company to company. The following checklist can help you find a policy that’s right for you.
1) Do you need life insurance?
The first thing you should determine is whether life insurance is right for you. Ask yourself, “Does anyone depend on me financially?” Think about your spouse, children, grandchildren, even your business partners.
If anyone in your life depends on you financially, you should consider a life insurance policy to protect them from unforeseen costs.
Even if you believe your dependents are adequately cared for, life insurance may still be worth considering. If you plan on leaving an estate, your family may need to pay estate taxes and other costs that life insurance can help cover.
Certain types of life insurance, such as final expense insurance (also called “burial insurance” or “funeral insurance”), can assist your loved ones with funeral costs, which can now cost up to $9,000 according to the National Funeral Directors Association. Life insurance for seniors - particularly final expense insurance - has become increasingly popular because of its focus on covering final expenses such as burial costs.
2) How much coverage do you need?
The next life insurance basic is determining the amount of coverage you need. The answer depends on a variety of personal factors, including your marital status, the size of your family, your debts, assets, and your end-of-life goals.
As a rule of thumb, the Wall Street Journal recommends purchasing coverage equal to 8 to 10 times your annual income. If you have life insurance through your employer, the coverage may not be enough and may terminate when you retire. Be sure you understand the terms of your employer's policy before deciding against additional coverage.
Don’t forget to factor in other costs as well: funeral expenses, debt repayment (such as your mortgage, car loans, and credit card debt), and any medical bills associated with your passing. You may also want to leave a financial gift for your spouse, children, or to charity. Your needs will change as time goes by, so periodically review your policy and check that it meets your financial needs. Typically the older you get, the less coverage you need.
3) What kind of policy do you need?
There are three general types of life insurance: term, whole life, and universal.
Term insurance pays benefits only if death occurs during the term of the policy, which normally runs from one to 30 years. Most term policies do not offer any other additional benefits. Term policies usually come in two types: level-term (where benefits remain the same through the length of the policy), or decreasing-term (where benefits typically diminish over the life of the policy).
Whole life insurance, sometimes called permanent life, pay benefits regardless of when the policyholder dies (as long as the policy is still in force). Most whole life policies last for the life of the policyholder and some accumulate cash value that can distribute cash payouts in the form of a loan. Policy loans must be repaid while the policyholder is still alive or the loan amount will be deducted from the benefit at the time of death. For most traditional whole life policies, the death benefit and the insurance premium remain the same for the length of the policy.
Universal life or adjustable life is the third type of policy and allows for more freedom than a standard whole life policy. With some universal policies, you can reduce or even skip payments. This may cause the value of the policy to increase at a slower rate since you are covering your payments with the current cash value.
Life insurance policies for seniors come in all shapes and sizes. Compare your life insurance options or talk with a local agent to get a quote.
4) How much coverage can you afford?
For many, deciding on whether to purchase a term or whole life insurance policy comes down to cost. When deciding how much coverage you can afford, be sure to consider your entire budget and any future changes that may impact your finances.
Some may look for the cheapest life insurance available, but many times these policies aren’t meant for seniors. Choose a policy with the benefits most likely to help surviving loved ones.
5) Can you get approved for the policy you want?
Some people feel that because of their age or health they will not be approved for life insurance. But enhancements in insurance underwriting and the availability of specialty insurers who focus on covering those with higher risks means life insurance is available to almost everyone.
Once you've found a company and policy that meets your needs, you will be asked to fill out an application.
To be approved for coverage, you'll need to provide some personal information. Your agent will need accurate information about your age, your height and weight, any health conditions you have, and any life insurance you already have. For some insurers, you may be asked to complete a medical exam to qualify.
For smaller policies, some companies offer life insurance without a medical exam. Senior life insurance policies, like a final expense policy, are usually issued based on your answers to health questions on the application.
It’s important to answer all questions honestly when filling out your application so your coverage can be issued accurately. Misrepresenting the truth can result in your policy being canceled or death benefits being denied if incorrect information was provided.
If you’re concerned about finding an affordable life insurance policy that’s easy to qualify for, consider getting final expense life insurance from Lincoln Heritage Life Insurance Company®. We are the leading final expense insurance company in the country and can qualify most people, even those with health problems. We’ve been serving seniors and their families since 1963.
Learn more about our affordable final expense program.< Back to Consumer Resources