You are a young senior, just over 60. Perhaps you’re recently retired and have big plans to cash in on the hard work of many years. In your 60s, you’re vital, healthy and ready! Of course, you will still want some life insurance coverage “just in case.” An appropriate policy will set your mind at ease about loved ones’ futures, should something unexpected happen. You hope to have a lot of years ahead, and the money to keep you comfortable through that time. So what type of senior life insurance policy should you get, and how much should you spend? This can be a tough question for seniors over 60.
A term life insurance policy covers you for a predetermined span of years. It can be a smart buy under the right circumstances. Your health, budget and coverage priorities are important factors when choosing a term policy.
Alternatively, some young seniors may find permanent (“universal-life” or “whole-life”) insurance a better buy. These policies generally come with higher premiums, and you may be paying them for much longer than with a term policy. However, certain policies have flexible underwriting, and most give you life insurance coverage for your lifetime.
Here’s everything you need to know about term life insurance for seniors over 60, as well as permanent life insurance options for seniors of all ages.
Term Life Insurance for Seniors Over 60
There are different types of term life insurance, but independent agents with expertise in senior life insurance policies usually recommend just one: level term life insurance. Level term life insurance has premiums and face amounts that do not change for the entire term period.
After the level term period expires, premiums rise considerably and become unaffordable. These policies are only intended to provide coverage for the length of the original term.
How long will you need coverage? That's the most important consideration in deciding whether a term policy meets your needs. These are the term options and how they apply to seniors:
- 10-year term- Seniors through age 80 can purchase a 10-year policy. Many carriers offer these policies. However, some carriers limit the purchase age to 70 or 75 years old for smokers.
- 15-year term- These are available for seniors through age 75. As with a 10-year policy many insurance companies offer such policies, but may limit the purchase age for smokers.
- 20-year term- Most insurance carriers limit the purchase age of 20-year policies through age 65, with smokers often seeing an even lower age limit.
- 30-year term- A 30-year term is not available for seniors over 60.
Applying for Term Life Insurance
Almost all term policies require full underwriting. This means applicants will take a paramedical exam that includes measures of height, weight, blood pressure and pulse. Blood and urine samples, as well as a complete medical history, are also required.You can also expect your medical records to be requested. (At this age, insurance companies like to see you having annual checkups and following your doctor's advice.) If you have medical issues, the underwriter may order records from multiple doctors. When the carrier has all of your medical information, along with your application and exam and lab results, they will assign you a rating.
Carrier Ratings for Insurance Applicants
Insurance companies employ a rating system to assess applicants and determine the premium amounts applicants should be charged for their selected life insurance policies. (This applies to term policies and permanent policies.) An applicant’s rating is based on their medical history and current level of health, as well as some aspects of lifestyle.
Ratings are classified as follows, in descending order:
- Preferred best or super preferred is the best possible rating, with the lowest premiums attached.
- Preferred has premiums higher than for the best class, but still quite reasonable.
- Standard is the third-best rating for many companies, although some carriers have a standard plus category between the standard and preferred ranks.
- Table Ratings range from A (1) to H (8). These ratings use the standard rate and add a percentage to it (often 25%). So, Table A usually carries rates that are 125% of standard. Table H may land you with rates as high as 200% of standard or may be a decline.
Permanent Life Insurance for Seniors
If term life insurance policies aren’t the right choice for you, even as a young senior, you have a number of choices for permanent policies, which generally last through your lifetime as long as the premiums are paid. These are the products available for seniors:
- Universal Life Insurance policies for seniors offer the least expensive permanent coverage and are very flexible. They can be structured to last your lifetime with no cash accumulation (Guaranteed premium universal life policies are useful for this purpose), essentially acting like a term policy for life.
- Whole Life Insurance is a permanent policy that amasses cash value. Although you can borrow from that value, it may affect policy guarantees. You should understand the fine print and work closely with your agent before selecting or borrowing from a whole life insurance policy. These policies are generally more expensive than universal life policies.
- Final Expense Insurance policies for seniors are small whole life policies. They have easier underwriting guidelines than universal or regular whole life policies. There is no medical exam or testing required. Many people who cannot qualify for traditional policies can still qualify for this type of policy. Face amounts for final expense coverage start as low as $2,000 and go up to $50,000.
- Guaranteed Issue Insurance requires no medical information at all. All applications are approved. However, the face amount payout is phased in over 2–3 years. If you can't get approved for other coverage, this is your only life insurance option.
How to Decide Which Policy is Right for You
Now that you know your options, how do you choose between them? The key is to consider your reasons for purchasing a life insurance policy. The benefits that are most important to you will quickly help you decide on the appropriate product.
An experienced independent life insurance agent is also an invaluable resource when making such an important decision. Here are some examples of life insurance benefits and the policies that serve them best:
- Covering final expenses (such as funeral costs)—A small permanent policy will suit if you simply want to cover final expenses so as not to burden loved ones. A whole life final expense policy is most likely your best option. These policies have face amounts from $2,000 up to $50,000 and they last for your lifetime. If you want more coverage, you can purchase policies from multiple companies.
- Protecting a spouse—The most comprehensive coverage may be a universal life policy with no cash accumulation, but a number of factors come into play when considering coverage for a surviving spouse. Your age, your spouse’s age, the desired face amount, your current health, and the premium you’re willing to pay are just a few considerations. The best possible approach to getting the right policy for protecting your spouse is using an experienced independent agent who can walk you through the process.
- Protect a special-needs child—If you have a special-needs child who will require life-long care, a universal life insurance policy may be the best, least-expensive choice. You require a policy that will last your lifetime and leave funds for your child.
- Estate tax protection—You definitely need a permanent policy for this purpose, and it doesn’t have to accumulate cash. Such policies are particularly helpful to cover inheritance taxes for your heirs. If you and your spouse are both living, you should consider a survivorship (or second to die) policy. Both spouses are insured, but there is one payout when the second spouse passes. This leaves money for the heirs to use for estate taxes, so no property needs to be liquidated.
- Mortgage- or debt protection—In this case, a term policy might be sufficient. For instance, if you only need enough extra money to cover a mortgage, you could certainly use a term policy. A level term policy (discussed above) will probably cost less than mortgage insurance. In mortgage insurance policies, premiums remain level and the face amount decreases. With a regular term policy, the premium is level, but so is the death benefit. It will leave your beneficiaries with some extra cash, and likely cost you less.
This is where your age, health and finances speak up.
- Age- Premiums are age based. The older you are, the more costly the policy. This is a good reason to apply when you are a young senior!
- Health- With disclosure of relevant medical information, your agent can help determine if you might qualify for a term or universal policy. Generally, universal underwriting guidelines are a bit more lenient than term policies. Also, certain carriers have programs where they will improve a Table rating (up to Table 3 or 4) back to standard rates, which can save you a lot of money. An independent insurance agent—who works with numerous carriers rather than working for just one company—will know the rules and requirements of different policies.
- Finances- You have to be comfortable with your insurance premiums. No one wants to be insurance poor! Your insurance agent can help determine the optimum policy to fit your needs and your budget.
The Bottom Line
Whether you're a senior over 60 who needs life insurance for 10 years or for your lifetime, it's important to fully understand your options. As a young senior, perhaps purchasing individual life insurance for the first time, you want the best bang for your buck and the best product to suit your needs. An independent life insurance agent is, without doubt, your best advocate for getting through this process quickly and effectively. Then, the open road is waiting!
Call the specialists at LifeNet Insurance Solutions today for assistance, answers and a free quote. (800)698-7033
About the Author
Lenny Robbins is the owner of LifeNet Insurance Solutions, which specializes in life insurance policies for seniors and Baby Boomers. With over 40 years’ experience in financial services, including the last 26 exclusively in life insurance advising, Lenny is an expert agent with diverse knowledge of the products available to clients moving into their best years. Lenny is committed to establishing client trust and ensuring clients are covered by the best policies for themselves and their dependents. He takes pride in knowing that clients return to LifeNet for advice and assistance as years pass and families grow.