What You Should Know About Life Insurance Policies for Seniors

Feb 14, 2023 4 min read

Life insurance is important to have regardless of age. It’s usually best to get a policy when you’re young, but people are living longer now and the need for life insurance is rising. There are different types of life insurance policies available that can help, but each will have specific requirements. Finding the right senior life insurance policy isn’t as hard as you might think.

Is Life Insurance Worth It for Seniors?

As mentioned before, everyone should have life insurance for a variety of reasons. As part of the estate planning process, life insurance can help take care of your loved ones and help tie any loose ends you may leave after you pass. Estate planning can be confusing based on what your estate may look like, but there are various tools and tips that can be helpful. If you do have life insurance, how do you know if you have the right coverage or the necessary amount? If you haven’t looked at your policy in some time, there is a risk that you may be underinsured. It’s definitely worth it for any age, especially for seniors depending on the situation. 

Reasons You May Need a Senior Life Insurance Policy

The older you get, the more your life insurance needs may change. Figuring out what your life insurance needs are may help you determine how much coverage you actually need. 

  1. Cover Final Expenses

Some people may not want to think about expenses that come after death, but making sure all final expenses are covered can help your loved ones avoid that burden. A death benefit can help bring peace to your loved ones by providing the money needed to cover final expenses. These expenses will usually be anything related to a funeral or memorial service, or medical expenses related to a sudden health issue and the client doesn’t survive. 

  1. Take Care of Outstanding Debt

Let’s say you may have accumulated some debt as you are getting closer to retirement – your life insurance policy may be able to help. With your life insurance policy, you may be able to pay off your debt while you’re in retirement with the accumulated cash value of your premiums. Otherwise, your death benefit can help with financial obligations you may have left behind. 

  1. Support a Surviving Spouse or Dependents

Determine the amount of money that would be required for your beneficiaries to be provided for. Leaving them with enough financial support can ease the financial burden they may have once you’ve passed. Look at the age of your beneficiaries and what the cost of living is so you are able to determine the coverage needed to maintain their standard of living. 

  1. Cover Estate Taxes

Estate taxes can be a burden for anyone, especially some beneficiaries if they are younger and not aware of what comes with a transferred estate. Usually, the beneficiaries aren’t aware of how much an estate can be taxed until they are getting the estate. There can also be two estate taxes, federal and state, depending on where you live. Understanding how estate taxes work isn’t a walk in the park for many, but researching and speaking to your advisor can help navigate your situation. 

  1. Leave a Charitable Donation

Leaving an estate to a charity can be an option for policyholders and can also have some benefits. Charitable giving can help reduce estate taxes and can allow tax deductions which allows for the charity to receive more of the donation. 

Types of Life Insurance for Seniors

Now, let’s discuss the different types of life insurance. Even if you’re older, life insurance options are still available for seniors. Finding the best option for seniors that can provide affordable and flexible coverage later in life without having any previous life insurance is important. 

Choice Term Life Insurance

With a choice term life insurance policy you are getting a policy that will provide coverage for a pre-determined length of time. You can choose to be covered for a certain number of years, or to be covered until you turn 65.

Income Guard Term Life Insurance

With an income guard term life insurance policy you have the option to select coverage for either 10 or 20 years. This type will allow your beneficiary to receive a benefit payment each month plus an additional $20,000 death benefit. 

Whole Life Insurance

Whole life insurance is a permanent life insurance that will provide coverage for your lifetime. It will pay out a death benefit, but it also builds cash value as your fixed premium payments accumulate.

Universal Life Insurance

Universal life insurance is a type of permanent coverage that allows flexibility in raising or lowering premiums and the death benefit, within certain limits. Because of the flexibility, the premiums and the coverage amount can be adjusted as your needs change. The returns on UL policies are not guaranteed. Generally, withdrawals and loans from UL policies are received income tax-free. With universal life insurance, there are three types: indexed universal life, variable universal life and guaranteed universal life. Indexed universal life insurance can generally allow you to earn interest but your return will depend on the limits that your insurer sets. Variable universal life insurance will allow you to choose how you want to invest with your policy. Guaranteed universal life insurance will maintain the same death benefit and premiums for the entire length of the policy. 

Living Benefit Add-On

With any type of policy, it’s always a good idea to look at any riders that you could potentially add to your policy. Again, every policy has its own unique riders. Look into riders that can help cover for terminal and chronic illnesses. Unexpected illnesses can happen to anyone at any time. Having to pay medical bills can become a burden to many, but having the right additions to your policy can help ease this burden. 

Finding the right policy to best fit your needs is important and getting the right amount of coverage can make a difference. Meet with your local Farm Bureau agent today to get started.

Neither the Company nor its agents or advisors give tax, accounting or legal advice. Consult your professional advisor in these areas.

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