The Average Cost for Term Life Insurance for Seniors

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Life insurance for senior citizens allows seniors to purchase a policy that they can use for burial expenses, for paying off an existing mortgage, for estate planning or for any purpose. If you're a senior, the average cost of your insurance policy depends entirely on your health and exact age. Life insurance becomes extremely expensive as you get older. It's not uncommon for premiums to be tens of thousands of dollars for a policy of $250,000 or less.

Types

The types of policies available to you as a senior are the same as those available to you when you were younger. The difference is that it is more common for seniors to purchase a permanent life insurance policy because term life insurance ends after a certain period of time and many seniors have a need for burial insurance and estate planning. Examples of permanent life insurance would be whole life insurance and universal life insurance.

Significance

The significance of buying life insurance when you're a senior is that you are able to provide funds to your beneficiary for your estate planning or funeral needs. Premiums are generally payable for the rest of your life and most policies designed for seniors offer guaranteed death benefits.

Benefits

The benefit of purchasing senior life insurance is that your family doesn't have to come up with the money to pay for your funeral. You also have the ability to keep most of your savings intact. This means that a small portion of your savings is used to pay for premiums on a large death benefit.

Disadvantage

The disadvantage to buying life insurance as a senior is the fact that premiums will be more expensive than when you were younger. This is because you are closer to the insurance company's predicted age of death. Lower premiums may be achievable by buying some types of universal life insurance that offer secondary guarantees on death benefits. Universal life insurance does not build cash value under these circumstances like whole life insurance will, which results in slightly lower premiums.

Considerations

Consider the cost of buying a permanent policy and what you need it for. Many times life insurance can be purchased using a small portion of your retirement savings, but if your life insurance policy would cause you to spend more of your savings than you want, you can opt to pay for funeral costs or estate taxes out of your personal savings. Additionally, make sure that you would be subject to estate taxes prior to purchasing a life insurance policy.

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References

  • "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A. Crane; 2007
  • "Life Insurance"; Kenneth Black, Jr., Harold D. Skipper, Jr.; 1994
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