Senior life insurance - What you need to know

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Usually, seniors don’t need life insurance. They no longer need to cover expenses for their dependents and have fewer financial obligations overall.

However, some people may need to buy life insurance when they’re much older for the following reasons:

To leave a legacy to their children, grandchildren or a charity
Provide their spouse with retirement income if they have a pension without a death benefit
Offer cash to heirs
Help a child or grandchild with special needs who will always need financial support
Pay for funeral expenses and end-of-life medical bills

Unfortunately, life insurance premiums are much costlier for seniors than younger age groups. This is because insurers price policies on risk. The more likely someone is to die at any given age, the higher the cost of coverage.

Seniors still have options for life insurance, however. Converting a term policy to a permanent one can save on premiums. And if a senior is buying a new policy and eligible for term life insurance, coverage can still be affordable.

Why should seniors get life insurance?

Usually, life insurance is used as income replacement. For seniors, this may mean compensating for Social Security benefits or providing income for a surviving partner after pension payouts stop.

Seniors may also want to use the money to create an education trust for their grandchildren.

How to get life insurance coverage as a senior

Premiums are lower when you’re younger. People who buy life insurance in their 20s and 30s will likely live much longer than someone who buys a policy as a senior, so insurers give younger people the best rates.

However, people in their 60s or 70s — and sometimes even early 80s — can still qualify for coverage. You may be able to buy permanent life insurance up to age 80, and sometimes age 85.

“Individuals in their 60s, 70s and older can get life insurance,” says Paul Lapiana, head of Brand, Product and Affiliated Distribution at MassMutual. “Generally speaking, permanent life insurance is available to older age brackets than term insurance.”

Keith Moeller, a wealth management advisor with Northwestern Mutual in Minneapolis, gives the example of a 67-year-old client who was comparing term and permanent policies. The longest term policy for a person that age would only last for 15 years. Instead, the person chose a permanent policy that could continue no matter how long they lived.

What to do if you’re ineligible for traditional life insurance

Being a senior or in poor health can make it more difficult to qualify for a traditional life insurance policy.

“Health is always a consideration, and as we get older, we tend to develop more health issues,” says Moeller. “But you don’t need to be in perfect health.”

There are certain types of life insurance policies called burial insurance that are good for people who otherwise can’t get coverage. These policies cost more and have smaller death benefits than traditional life insurance policies.

Insurers generally charge more for these policies because they assume applicants are in poor health. If you don’t have major health issues, it’s a good idea to see if you can qualify for a traditional policy first, which is less expensive.

Moeller typically prescreens his clients before they apply for a policy. That way, he’ll have a good idea of if they will qualify for standard life insurance coverage.

“I try to learn as much as I can about the person’s health history as they’re willing to share, and we call the underwriters in advance and ask what is the likely approval rate. Would they likely be in the best-rate class, the second-best or third-best class? We’re pretty closely able to target the underwriting class and the rates that they’re looking at,” says Moeller.

Lapiana recommends that people with medical issues take extra steps to build a strong case for their health.

“If you experience medical issues, follow and document treatment plans as insurers often look at this. It can make the difference between obtaining a policy and not, as well as premium rates,” he says. “Another suggestion is to work with an experienced financial services professional representing financially strong life insurance carriers to obtain guidance on the best options for your personal situation.”

Additionally, if you have a term insurance policy that will expire soon, you can convert the policy to permanent coverage regardless of your health. Your premiums will increase, but not as much as they would if you bought an entirely new policy.

Some policies let you convert to permanent coverage at any time, while others only offer that option for a limited number of years.

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