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Like many people who have reached their senior years — typically retirement age or at least 62 years old — you might be wondering how you can be sure that you’re providing the best financial protection for your family now and in the future.
The idea of purchasing a whole life insurance policy has probably come up. Still, you might not be sure if this type of life insurance is the right option for you and your loved ones. Even if you decide that whole life insurance makes sense for your particular circumstances, there are different coverage options and whole life policies to choose from—and you might not be sure which direction to take.
This article offers the information you may need to make an informed decision about purchasing whole life insurance and covers the best life insurance for seniors.
About Whole Life Insurance
All life insurance policies are legal contracts between an insurance company (the insurer) and the insurance policyholder (generally, the insured). As long as the insured pays the premium, the insurer must pay a designated beneficiary a certain sum of money upon the insured’s death.
Generally speaking, life insurance falls into one of two categories. It’s either whole life insurance or term life insurance.
Term life insurance is only in effect for the limited number of years spelled out in the policy. Under a term life insurance contract, the benefit is only paid to the beneficiary if the insured party dies during this term policy period.
On the other hand, whole life insurance is a form of permanent life insurance. There are no expiration dates with whole life insurance. The policy lasts for the entirety of the insured’s life so long as they continue to pay the premium.
Some whole life policies accumulate a cash value over time, and policyholders can take out loans against this value. But if the loans aren’t paid back during the insured’s life, the insurance company will deduct the loan from the beneficiary’s payment . The policy could potentially lapse, as well.
How Does Whole Life Insurance Work for Seniors?
Older people may think they aren’t eligible for whole life insurance due to their current health or medical history. While, in some circumstances, these factors can cause an individual not to be insurable, there are several ways that someone in their later years can qualify for whole life insurance.
It all begins with the application process. Along with providing your contact information, you’ll need to answer some questions about your finances and your medical history.
Once you get an initial quote—an estimate of what you’d owe for the policy benefit amount you want—the policy will go to underwriting. Depending on your age and how you answered the health questions, you might be asked to undergo a medical exam.
After receiving all the information needed to assess your eligibility, the insurance company will decide whether you qualify for a particular policy and how much it will cost.
Naturally, premiums are typically higher for older individuals.
If, for example, you’re in your 50s and want a policy to cover all your medical bills and final expenses and serve as an inheritance for children and grandchildren, whole life insurance will likely be a good fit.
People in their 60s might be re-evaluating their current investments—including any life insurance policies—to see if they’re still needed or sufficient for what their family might need should they die.
If, for example, you have a term life insurance policy that’s due to expire, you might want to consider converting it into a whole life policy that wouldn’t expire and might better meet your needs. You might even be able to convert that term policy into a whole life policy without the hassles of underwriting if it includes a guaranteed conversion feature.
The good news is that there’s no charge to request a quote, talk to a knowledgeable professional about your options, or even go ahead and apply for coverage.
People past 70 may encounter more challenges when qualifying for a whole life policy. But that doesn’t mean you shouldn’t inquire about your options for permanent coverage.
For example, you might be able to purchase a policy if you agree to pay for it in one lump sum. There are certain advantages to leaving your beneficiaries the proceeds of an insurance policy instead of cash. A knowledgeable investment adviser can help in this regard.
Is a Whole Life Insurance Policy Good for Seniors?
Older people sign up for whole life insurance for various reasons. Like many others, you may want the security of knowing that your family members will receive a certain amount of money upon your passing so they can:
- Replace the income you’ve been providing. According to the U.S. Bureau of Labor Statistics (BLS), the number of people still working past 75 is expected to grow 96% by 2030. Many older workers have dependents relying on the income they produce. A whole life insurance policy guarantees their dependent beneficiaries a set amount of money to help with living expenses after their loved one passes away.
- Pay off debt, including medical bills. If you have secured or unsecured debt— including amounts owed on a mortgage or credit cards—your life insurance benefits could be used to pay off these financial obligations after your death. Even with Medicare or other health insurance coverage, many people incur large medical bills and long-term care expenses in their later years. You could use your life insurance benefits to pay off these medical debts.
- Cover your final expenses. After a person dies, their heirs are left with funeral costs and other burial expenses. They might also incur the legal and administrative costs of probate and otherwise disposing of and transferring the decedent’s assets. Sometimes, there are estate taxes to pay, which can take a huge chunk of a person’s accumulated assets. The death benefit from final expense insurance can go a long way in helping to defray these costs and expenses.
- Enjoy an inheritance from you. A common reason for obtaining whole life insurance is the desire to leave an inheritance for children, grandchildren and other loved ones. Knowing that you can help your family members live their best lives is one of the best rewards of signing up for life insurance in your senior years.
- Support your philanthropic interests. It’s not unusual for older people to support their favorite charities by buying a life insurance policy and naming the charity as the beneficiary.
Types of Whole Life Insurance Policies to Consider
There are several types of whole life insurance plans to consider. Life insurance rates are something you’ll want to speak to an insurance agent about, as there are several factors— such as whether you’re in good health and what type of living benefits you might want—that are considered when providing life insurance quotes.
- Level Premium Whole Life is the standard type of permanent policy that most people are familiar with. You pay a fixed premium per year for this insurance, which tends to be available at a lower cost than other policies since you’re spreading out the payments over many years.
- Limited Payment Whole Life is a type of policy that requires you to make payments but for a finite amount of time, usually at a higher rate than a standard policy. Once you complete all the payments, your policy remains in force until your beneficiaries are paid upon your death.
- Single Premium Whole Life requires you to pay your premium upfront in a single lump sum. Once this is paid, you’re guaranteed insurance coverage for the rest of your life, with no further premium payments required.
- Simplified Issue Whole Life is a type of permanent life insurance that’s easier for most people to get. While coverage amounts are smaller, there’s no waiting period, and you won’t be required to undergo a medical exam or a blood test to qualify.
How to Choose the Best Whole Life Insurance for Seniors
Buying life insurance requires some thought and analysis. As you learn more about your options for obtaining whole life insurance, ask yourself these questions to aid in your decision:
- What is the amount of coverage that I need? Think about the extent your dependents rely on your income and what they’ll require to maintain their current standard of living after your death. Do you have debts that will need to be paid? If so, how much will it take to satisfy those debts? Also, consider end-of-life expenses like funeral expenses and the cost of probate.
- How much coverage do I already have? If you have life insurance through an employer, think about whether and to what extent this policy meets your family’s needs in the short and long terms. For example, if you succumb to a terminal illness, can you cash in a portion of a current policy as an accelerated death benefit? Does your policy have a death benefit rider that increases the policy’s payout? Now is the time to make sure you understand your current insurance situation and consider if the policies you own will expire or payout enough.
- Do I want to leave a legacy to my heirs or a favorite charitable cause? After you’ve assessed your coverage needs and current insurance situation, take some time to think about what your hopes are for your family or a cause near and dear to your heart. Then, consider what whole life insurance options might help you leave behind help and prosperity for what’s closest to your heart.
Contact Western & Southern to Determine the Best Whole Life Insurance Options for You
It’s never too late for seniors to explore their life insurance options. Finding the best products for you and your family—whether it’s burial insurance, a final expense policy, or a guaranteed issue policy (no-exam life insurance)—doesn’t have to be difficult.
Western & Southern has a team of experts who understand how the best life insurance companies issue life insurance policies. We can help you get life insurance to meet your particular needs.
Request a free quote or call 866-832-7714 to speak to one of our life insurance policy experts today.