Life Insurance for Seniors Over 65
Once you reach retirement age, you may think life insurance isn’t an option. Discover how to get life insurance for seniors over 65.
Your focus tends to shift to two things at retirement age – enjoying your golden years and considering your legacy. Hopefully, by the time you’re 65, you’ll have the first part handled. As for your legacy, life insurance can offer significant benefits to your loved ones once you’re gone.
That said, now that you’re older, you may be wondering if life insurance is possible or affordable. Thankfully, it is. We’re going to discuss the various options for life insurance for seniors over 65 so that you can make the right choice for yourself and your family. Here is what you need to know.
Step One: What Are Your Life Insurance Goals?
Before buying a policy, it helps to know why you need it. When you’re younger, life insurance can act as a safety net for your spouse and/or children if you pass. Now that you’re older, however, your children are likely adult age, and your bills may not be as high.
So, if that is the case, what do you want to accomplish with life insurance? Here are some potential goals:
- Funeral Expenses – The average funeral costs at least $7,000 in the United States. Unfortunately, your family may not have that kind of disposable cash. Depending on the type of memorial service you have, this figure could be much higher.
- Pay Off Debt – Ideally, you’ll have all of your debts repaid by the time you retire or shortly after that. Even if that is true, your children may be amassing debts, such as car payments, mortgages, and credit cards. Your death benefit could help your loved ones pay these off.
- Inheritance – Leaving money for your kids is a great way to secure your legacy. If you don’t have much money left in your nest egg in late retirement, a life insurance policy can offer a payout that will keep your loved ones financially secure.
- Charity – Just because most people name their spouses or children as life insurance beneficiaries doesn’t mean those are the only options. You can name multiple beneficiaries and split the payment between them. You can name a charity so that your money goes to a good cause.
No matter what your goals are, be sure to talk them over with your family first. While it can be difficult to discuss these matters, it is far better for everyone to be on the same page before something happens.
For example, if you want your life insurance death benefit to go to something specific (i.e., college for the grandkids), you have to let your beneficiaries know. It’s also much better to discuss these details beforehand so you can get input from your family, rather than outlining your wishes in a will.
Step Two: How Much Coverage Do You Need?
Once you’ve determined your life insurance goals, the next step is to figure out the size of your death benefit.
Unfortunately, being over 65 means that you have more limitations than if you purchased a plan when you were 40 or 50. However, don’t get discouraged – you still have plenty of options available.
At this age, most term and whole life insurance policies (more on those later) offer six-figure death benefits (i.e., $100,000). That said, there’s no reason to pay for more life insurance than necessary.
For example, if you only want to provide money for funeral expenses, you can opt for burial insurance instead. These policies typically max out at $25,000. Best of all, if your loved ones have money left over, they can keep the remainder – it doesn’t all have to go toward your final expenses.
Life Insurance Costs
Another point to consider is the cost of a new life insurance policy. Depending on the type of coverage you get, you could spend a few hundred dollars per month or over $1000. Term insurance is the cheapest option, but it also has limitations and can expire.
Before buying a policy, be sure to talk with an expert about your goals and your budget. From there, you can find the right coverage amount that won’t eat too much of your nest egg.
One element to avoid at this age is increasing premiums. Some policies will charge more as you get older, which can get quite expensive. When looking at plans, pay attention to ones that offer “level benefits” instead of “level premiums.”
Level benefits mean that your death benefit doesn’t decrease as you age. However, most life insurance policies have level benefits, so you don’t need to worry about that. Level premiums, however, mean that you pay the same amount every month, no matter what. If you have significant health issues, you might not have a choice, but always stick to level premiums if possible.
Step Three: What Kind of Life Insurance Do You Need?
Broadly speaking, there are two types of life insurance options: term and whole. However, when you break them down, there are additional plans that may work best for your situation. Let’s take a look at them all.
Term Life Insurance
If you want something quick and easy, term insurance is your best bet. These policies are the simplest to understand and the cheapest. All you have to do is pick the size of your death benefit (i.e., $100,000) and the length of your policy (i.e., 20 years).
The monthly rate depends on your age and health status. If you want a high death benefit, you will need to take a medical exam to verify your current health. If you’re looking for $100,000 or less, you may be able to avoid the exam and fill out a questionnaire instead.
One downside of term insurance is that it will expire. If you purchased a 20-year policy at 65 and reach 85, you won’t have a death benefit. If you still want to provide financial security for your loved ones, you’ll have to purchase a new plan, which is hard at that age (but not impossible).
So, you likely want to choose a longer-term, just to be safe. Otherwise, you might decide to go with whole life insurance, which never expires.
Whole Life Insurance
This coverage type is also referred to as permanent life insurance since it stays in effect as long as you keep up with your premiums. There are multiple versions of whole life insurance, so you have more flexibility when choosing a policy.
Typically, whole insurance is ideal for building a cash value portion (CV). You can use the CV while you’re still alive to pay for various expenses, such as buying a house or paying off debt. However, now that you’ve reached retirement age, the CV isn’t as useful. Not only is it harder to build, but you likely have other investments that can cover large expenses.
So, what can you do if you want permanent life insurance but don’t care about building a cash value portion? Here are a couple of other choices that fall into this category:
- Burial Insurance – These final expense policies are permanent, and depending on the size of the death benefit, you can likely pay it off before you die. If you’re in good health, the monthly premiums are reasonable.
- Guaranteed Issue – As the name suggests, you can get this policy no matter what – even if you have a serious health condition (i.e., cancer). These plans are costly, though, and come with a two-year waiting period. We don’t recommend them unless you have no other options.
- Guaranteed Universal – In this case, the “guaranteed” part of the name refers to the benefits, not the approval process. Rather than paying until you die, GUL plans allow you to pick an age, such as 110 years old. As long as you pass before then, your benefits are guaranteed. GUL plans also offer a modest cash value portion.
Step Four: How Much Coverage Can I Qualify For?
Unfortunately, one adverse side effect of waiting to buy life insurance at age 65 or higher is that you are a higher risk. Here are some factors to consider before searching for a plan:
- Don’t Wait Past Age 70 – Many policies have an age limit of 70 years, so if you wait too long, your options will be much more limited. You can still get coverage, but not as much, and your premiums will be higher.
- Consider Health Conditions – If you have any significant conditions like diabetes or high blood pressure, you will have to disclose those to your insurance company. If they’re under control, you’ll have more options when choosing a plan.
- Compare Policies – No matter what age you are, comparing rates and plans across many life insurance companies is a smart move. For example, some insurers deny coverage for diabetes, while others offer policies as long as your condition is stable.
Contact NextGen Life Insurance Today
Never settle for life insurance coverage that doesn’t meet your needs. At NextGen Life Insurance, we’ll work with you to find the right plan for your budget and goals. Get your free quote today or call us at 646-216-4199 to get started.