5 life insurance options for seniors

| 23 Aug 2022

Age can impact how much your clients pay for life insurance. As they age, they become more at risk of dying, which in turn is a risk of payout for a term life insurance policy or can be fewer years they pay on a whole life policy.

As such, insurance companies typically give the lowest rates to the policies that they believe will be paying premiums for the longest amount of time.

Here are a few options for your clients as well as what age they should be if they are considering each.

The five life insurance options for older adults are:


  1. Term life 

If your clients are still relatively young, term life insurance may be a good option because premiums are often low relative to the amount of coverage. These policies usually have terms of 10, 20 or 30 years.

However, they may have fewer options as they age, and fees may also increase, which makes this one an option but not necessarily a great option.

For example, they may not be able to buy a 30-year term life policy if they are older than 55 years of age. Still, some insurance companies do offer term life policies with shorter terms for those as old as 85.


  1. Whole life 

Whole life insurance is sometimes a better option for older clients since it stays in effect until the end of your clients’ lives. Whole life insurance usually has higher premiums than term life insurance, but it comes with a permanent death benefit for beneficiaries. They also have a cash value against which your clients can borrow in the form of a loan while they are still alive.

Whole-life policies are also less likely to require a medical exam than term-life policies, so this may be a better option if your clients have pre-existing health conditions. Some insurance companies offer whole-life policies for those up to age 80. However, the fewer years the company expects you to pay premiums, the more expensive the policy will likely be.


  1. Universal life 

Universal life insurance is like whole life insurance in some ways as it comes with lifelong protection and has a cash value. Again, the premiums will tend to be high, but your clients can typically be covered until 100 years old for many policies.

The main way universal life differs from whole life is premiums and the death benefit.

With whole life, both are fixed but with universal life, both are flexible. Both death benefits and premiums can be reduced to lower monthly bills or increased if your clients want more coverage.


  1. Guaranteed universal life 

Guaranteed universal life insurance is a hybrid of whole and universal life insurance. The premium is guaranteed, but you have flexibility with your death benefit. It also tends to be cheaper than whole life insurance because there is minimal cash value accumulation. This tends to be one of the best options for those later in life who do not expect a large cash value from their life insurance. Some policies provide coverage up to age 121 and can provide hundreds of thousands in coverage.


  1. Final expense insurance 

Final expense insurance is a permanent life insurance policy that is usually available to adults up to age 85. These policies usually only cover your end-of-life expenses, such as funeral costs and medical bills. These policies do not provide as much coverage as whole or universal life, but the premiums may be much lower.


Good financial advisors will be able to help their clients work through these considerations before they make a final decision.

Ultimately, you would want to consider the length of time your clients expect to live, how much coverage they need and how much they can afford before they make their final decision.


This article is an abridged version of a post Age Limits and Impact on Life Insurance by Bob Haegele which first appeared on SmartAsset Blog.