Life insurance is an important financial product that individuals may consider purchasing at any stage in life. There is a common misconception that seniors who do not already have a life insurance policy should not or cannot purchase life insurance. However, there are a number of life insurance products that may work well for adults over 50; the most important consideration is what product may best meet your needs given your current financial situation.
What Types of Life Insurance Can a Senior Get?
The following list represents a number of life insurance policy options that may be applicable to seniors.
Term Life Insurance
Term Life Insurance is a policy that provides coverage over a specified period of time, as outlined in the policy language. This option offers traditional life insurance benefits wherein monthly premiums remain at a given rate over the length of the policy term. This type of life insurance coverage is flexible, can be set for a period of time between 10 and 30 years, and is ideal for individuals with a strict budget. Those who want life insurance for a set amount of time, are in good health, and are under the age of 75 are in a good position to consider Term Life Insurance.
Quality of Life Insurance
Quality of Life Insurance, with Living Benefits, can offer seniors a source of funds to help with qualifying chronic, critical, or terminal health conditions during their lifetime*, while providing a death benefit for their named beneficiaries. This type of policy may be appropriate for seniors who want to protect their beneficiaries but who are concerned about the costs of a qualifying chronic, critical, or terminal illness. This option is beneficial in that it is flexible and customizable for seniors. Quality of Life Insurance comes in Term and Universal Life versions; with a Universal Life Quality of Life Insurance policy, you may even be able to accumulate cash value that will be available in the future by withdrawal or policy loan.
Guaranteed Issue Whole Life Insurance
Guaranteed Issue Whole Life Insurance** is often referred to as Senior Life Insurance or Life Insurance for the Elderly. This type of policy was originally designed to accommodate individuals who are looking for life insurance later in life, from ages 50 to 80 years of age, and can help alleviate financial strain on loved ones for final expenses.
One of the unique benefits of this option is that Guaranteed Issue Whole Life Insurance offers seniors guaranteed acceptance life insurance with no medical exam over 50, 60, and 70 years of age. With this type of insurance, those under 80-years-old do not answer health-related questions. This policy also offers Living Benefits at no extra cost; these Living Benefits can help cover costs associated with chronic or terminal illnesses or quality of life expenses that the insured may face during their lifetime***.
Opting for this policy typically involves a smaller coverage amount (around $5,000 to $25,000) than an underwritten life insurance policy; the policy proceeds can be used for anything and are often used to help with final expenses like burial costs, balances on credit cards, or the deceased's remaining medical bills.***
Universal Life Insurance
Universal Life Insurance policies are permanent insurance policies that can be beneficial over the long term. Seniors who are later in life may opt for this type of policy in order to take advantage of its variable nature and certain potential tax benefits.****
Universal Life Insurance is flexible, allowing the insured to increase or decrease the death benefit**** to accommodate financial needs or constraints as they arise. This type of coverage also provides for interest crediting, meaning that your policy’s cash value can grow over time. The interest credited is tax-deferred; under current tax laws, you won't have to pay annual federal income taxes on your credited interest, and your beneficiaries generally do not have to pay income tax when the policy is paid out as a death benefit.****
Universal Life Insurance offers compelling benefits, but seniors should also note that this policy option may come with higher premiums than other life insurance products.
***The total amount of all AGL Guaranteed Issue Whole Life Insurance policies on any person cannot exceed $25,000 in the aggregate.
Why Would I Need Life Insurance Over 60?
Later in life, you may encounter reasons why a life insurance policy makes sense. Here are a few things to consider:
- You have dependents: You might have had children later in life or you might be raising your grandchildren if their parents aren't around. Similarly, if you have a special needs child that requires life-long care, you may want to get a life insurance policy to help take care of them if you pass on.
- Pension is not guaranteed: In some cases, a pension will not be paid out or will be reduced if the individual passes. Senior life insurance can provide extra funds upon the insured’s death.
- You don’t want your loved ones to be burdened with final expenses: In 2021, the median cost of a funeral with a viewing and burial in the U.S. was $7,848, according to the National Funeral Directors Association. Life insurance can help your loved ones cover the cost of funeral expenses and help with any debt or medical bills you might leave behind.
What Is the Oldest Age You Can Get Life Insurance?
There is no single rule when it comes to age limits on life insurance. With many insurers, senior citizens, or adults over 50 years of age, are generally still eligible to apply for new life insurance policies or to expand their existing coverage. While an individual life insurance company may set age limits on certain financial products, a senior who is considering life insurance should determine for themselves whether a policy is needed and fits their budget given their stage in life, financial standing, and intentions for the policy. Seniors should also keep in mind that the premium for a life insurance policy can increase with age, depending on the policy.
How Much Life Insurance Coverage Should I Get?
Life insurance may be a long-term solution for estate planning, inheritance planning, or funeral expenses. The amount of coverage you should get depends on the reason you're taking out the policy. You should discuss your desires with your insurance agent and other financial professionals, who can make a recommendation for your ideal plan.
If the coverage is intended to help with funeral expenses, around $25,000 maybe enough, based on current funeral costs.2 If the goal is to leave heirs a lump sum, the appropriate coverage amount might be between $100,000 to $1 million, depending on their needs and your insurability. If you're getting paid a certain pension amount, and that will be eliminated when you pass on, you'll most likely want to factor in those payments for however long you'd want to provide for your family after your death.
1 http://www.nfda.org
2 http://www.nfda.org
You should discuss this with whoever your beneficiaries would be, like your spouse and dependents, to get their thoughts. It's also a good idea to meet with a financial advisor or lawyer to help determine your coverage needs.
What Is the Best Senior Life Insurance?
The "best" life insurance for seniors depends on a number of factors that are all dependent upon the individual’s needs, wants, and budget. Some factors that a senior should consider when purchasing a life insurance product are their financial position, the need for flexibility, tax considerations, and what kinds of coverage will suit their individual needs.
Below is a list of potential coverages that may be appropriate for seniors of various ages. Its important to note that this list is based only on the most common types of life insurance at each age and is not definitive. Depending on the circ*mstances, any life insurance policy may be applicable for any age. A 50-year-old may decide Guaranteed Issue Life Insurance is best for them and a 70-year-old may opt for Term Life Insurance. Consider speaking with a life insurance agent to best determine the right policy for you.
Life insurance for seniors over 50:
- Term Life Insurance
- A permanent policy
- Quality of Life Insurance
Life insurance for seniors over 60:
- Term Life Insurance
- Universal Life Insurance
Life insurance for seniors over 70:
- Guaranteed Issue Whole Life Insurance
Browse Senior Life Insurance Policies with AIG Direct
The decision to purchase or expand a life insurance policy later in life is one that can require thorough consideration. To speak with a professional insurance agent about your options or to get life insurance quotes for adults over 50,60, and 70, contact AIG Direct today.
*Important Consumer Disclosures Regarding Accelerated Benefit Riders.
**Important Information Regarding Graded Death Benefits: The GIWL policy referenced offers a limited death benefit in the first two years of the policy. Should death occur in the first two years, a death benefit will be equal to 110% of the premiums paid. In the event of suicide, the death benefit is limited to a refund of premiums only.
***The total amount of all AGL Guaranteed Issue Whole Life Insurance policies on any person cannot exceed $25,000 in the aggregate.
****Death Benefits are generally excludable from the beneficiary’s federal taxable income under most circ*mstances and under current federal income tax law.
Additional Resources:
- Senior Life Insurance Without a Medical Exam
- Life Insurance Guide After Retirement
