Life insurance provides cash to your beneficiaries after you die to help support them.
But what aboutlife insurancefor seniors?
Does it make sense?
Dealing with estates is tricky.Dear Pennywades in with a reader question about paying funeral expenses for an estranged father.
But for others, purchasing a new policy doesnt make financial sense.
Heres what you should consider.
Can You Buy Life Insurance If Youre Over 65?
People over age 65 can buy life insurance.
However, the premiums will be higher and it may be more difficult to pass medical underwriting requirements.
But these types of policies come with restrictions and drawbacks.
(More on that later).
Your health and age are two big factors insurance companies use to determine the cost of your premiums.
The older you are, the more expensive it is to purchase life insurance coverage.
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Do You Need Life Insurance If Youre Over 65?
Not everyone needs life insurance after they retire.
An estate is the legal term for all the assets you own when you die.
After you pass away, the money in your estate is used to cover your outstanding debts.
Debts must be paid before your heirs receive any money.
But your loved one could still be on the hook if they cosigned a loan with you.
How Much Does Life Insurance Cost for People 65 and Older?
Life insurance gets more expensive with every year you wait to purchase a policy.
Simply put, the older you are, the higher your life insurance premiums will be.
Here are some examples.
Term life insurance policies tend to be cheaper than permanent life policies.
Term policies only last a specific amount of time.
But the cost can be staggering.
What Else Impacts Life Insurance Rates?
Your age isnt the only thing that determines a policys cost.
Heres some more information about the different types of life insurance.
Term Life Insurance
Term life insurance typically lasts 10, 20 or 30 years.
Longer lasting policies charge higher monthly premiums.
Once the term ends, your coverage expires and you no longer need to pay premiums.
Most of these policies require a medical exam.
Most policies have a conversion privilege of some sort, Wilson told The Penny Hoarder.
Youre protecting your insurability, he said.
Permanent Life Insurance
Permanent life insurance never expires so long as premiums are paid.
These policies can build up a cash value you’ve got the option to borrow against later.
There are several types of permanent life insurance, including whole, universal and guaranteed life.
Traditional policies require you to undergo a full medical exam, including a blood and urine test.
The insurance company may also contact your general practitioner to get a copy of your medical records.
Simplified Issue Life Insurance
Simplified issue life insurance doesnt require lab work or a medical exam.
Coverage amounts tend to be smaller, usually no more than $100,000.
Premiums will be more expensive though.
Unfortunately, accelerated underwriting is often only available to people 60 years or younger, Wilson said.
Guaranteed Issue Life Insurance
Guaranteed issue life insurance goes by many names.
Guaranteed issue is usually a permanent life insurance policy with a death benefit between $5,000 and $25,000.
Thats why its often called funeral insurance.
The payout wont cover much beyond final expenses and maybe some medical costs.
Youll want to understand the claims payout record for the company youre looking to buy from, Crossland said.
Policies for elders that guarantee coverage no matter your health situation may have incredibly restrictive language.
Low monthly premiums often make final expense insurance for seniors seem more attractive than other policies.
Lincoln Heritage Life Insurance offers guaranteed issue policies to seniors.
If you pay $50 a month for the policy, thats $600 a year.
Unless serious health issues disqualify you from better coverage, check out other policy types first.
An independent insurance agent or financial advisor can help you shop for the best quote among multiple companies.
Pros and Cons of Life Insurance for Seniors
Buying life insurance in retirement is a personal decision.
What makes sense for one person may not be the best move for someone else.
Before you buy a policy, weigh the pros and cons.
Many insurers can provide you with a basic quote if you fill out a form on their website.
Shop around for the best life insurance quotes.
Dont lie about your health status or medical history either.
It might be tempting to fib if youre in poor health but youll be committing insurance fraud.
If youre caught, the insurer can deny your utility.
That can make getting coverage from another insurance company more difficult, if not impossible.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
She focuses on retirement, life insurance, investing and taxes.
