Life Insurance for Senior Citizens- Is Term or Whole Life Better?

Lenny Robbins
Nov 20, 2013 1:27:00 PM

If you’re a senior citizen and are ready to buy life insurance, there are some things you must know before you jump in. To make the best possible choice for your life and loved ones, you should understand the difference between whole life and term life when purchasing life insurance. Here is a high level look at these two insurance products:

seniors-is-term-or-whole-life-better?-2018What Is Term Life?

This type of insurance covers you for a set period of time. Common terms offered with a policy like this are in increments of five years usually maxing at 30 years. The sole value of this policy is the face amount that will be paid out in the event of your death.

What Is Whole Life?

This type of insurance covers you for the rest of your life. It’s also one type of permanent life insurance. This type of policy accumulates cash value that you can borrow against or cash out at some point in the future depending on the terms of the policy. Remember if you borrow from the policy, it may significantly affect your premiums and the death benefit.

What Are the Benefits of Term Life?

  • Term life is generally more affordable than whole life
  • Usually is convertible to a permanent policy without underwriting for a period of time
  • Can get higher face amount for a lower premium compared to whole life
  • Able to have a premium that will not change for the entire term
  • Peace of mind

What Are the Benefits of Whole Life?

  • Premiums will never change or increase (if you don’t borrow from the policy)
  • The policy accumulates cash value over time 
  • Dividends earned can be paid out as cash or re-invested back into the policy to increase its value
  • Peace of mind

What Needs Does Term Life Meet?

  • Term life is better suited when looking for the biggest bang for your money
  • Term life will be less expensive for those with (or without) health issues
  • It is well suited for a specific financial goal that has an expiration date such as paying off a mortgage
  • Can provide more coverage than a permanent policy for a specific time frame at a lower cost

What Needs Does Whole Life Meet?

  • Whole life is available from birth through age 90 and has face amounts as low as $2,000
  • Some policies may have dividends and if reinvested in the policy can increase the face amount while keeping the premium level. It is possible to amass enough cash for the policy to pay for itself with no additional premiums
  • Can also be good for those who want a “get it and forget it” policy (but a universal life insurance policy can do the same, generally for less money)

What Are Some of the Downsides of Term Life?

  • You will have to reapply when the term ends. If your health has declined you may have problems obtaining insurance (you can convert to a permanent policy without underwriting for a period of time so if your health declines to the point where you are uninsurable, talk to your agent)
  • Premiums will likely increase each time you apply for a new term policy since you are older
  • The only value of the policy is the face amount in the event of your demise

What Are Some of the Downsides of Whole Life?

  • The initial premium cost of whole life will be more expensive than term life
  • If you borrow against the cash value this will be deducted from any payout
  • There is typically no flexibility for you to change the terms of your policy
  • If you have cash value in your policy when you pass away, your beneficiary will not receive it

What Factors Will Affect Your Term Life Premiums?

  • Age
  • Height and weight
  • Tobacco/alcohol use
  • Your current health
  • Your health history
  • Our family health history
  • Amount of coverage requested
  • Length of term

What Factors Will Affect Your Whole Life Premiums?

The same factors are considered when setting premiums for either of these two types of life insurance except length of term as whole life is permanent.

The Bottom Line

If you truly want to understand the difference between whole life and term life insurance and which product is better for your circumstances, consult an experienced and reputable Independent Life Insurance Agent. Seeking advice from an agent can help you make a better and more informed decision without it costing you a penny more! (And maybe costing you a lot less!)

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