The reason is that an insurance carrier has to accept a greater risk of having to pay on the policy and will, therefore, charge a higher price. The process of buying insurance at an advanced age is relatively complex, given the numerous options available on the market today. Though there is likely a product to suit just about every circumstance, I stand ready to assist you in identifying just the right one.
Term life insurance can make a great deal of sense, even for those who are older than the 40s. The concept is easy to understand, the products are straightforward, and the cost tends to be more affordable than other options in the same realm.
The only potential negative is that you might live longer than your policy extends. If you are concerned about paying for final expenses such as funeral costs and the like or if you wish to reduce estate tax liability, you may want to opt for a whole life policy.
Of course, you will pay higher premiums for such coverage. If there are elements of both types of insurance that appeal to you, take a look at a Guaranteed Universal Life policy. This will be less expensive than whole life, will cost a bit more than a term policy, but you don't need to worry about outliving your coverage.
Term Life Insurance
Just about everyone can benefit from a policy of term life insurance, and senior citizens are no exception. This type of policy offers the greatest amount of coverage at the most affordable price, particularly if the insured party is healthy.
A policy in this category will provide coverage during a stated period of years (typically between 10 and 30 years, in increments of five years). Premium payments remain constant over the term years. Should you decide to purchase a 10-year policy of term insurance that has a death benefit of $100,000, your premiums will be the same throughout that decade, and the designated beneficiaries will get $100,000 in the event you die at some point during the term.
If your death comes after the end of the stated term, they do not receive a payout. The only caveat regarding term policies is that you need to have no problem if you happen to outlive the policy.
Permanent Life Insurance
This variety of life insurance is designed to cover you for the remainder of your years. Your premium will stay the same each year you own the policy. Not only will you have a death benefit in place that will be paid to your beneficiaries when you die, but the policy also builds cash value which can be leveraged for borrowing.
Should you happen to die while such a loan remains unpaid, the death benefit paid out is reduced by the amount outstanding. Further, once you have died, the insurance carrier will retain the cash value of the policy.
Given the complex nature of whole life policies and the comparatively high premium cost compared to the size of the death benefit, a whole life policy only makes sense for certain types of senior citizens.
These policies can be useful if you are among those looking to reduce the estate tax implications for heirs or if you wish to leave a designated gift to a person or charitable cause, regardless of your age at death.
Guaranteed Universal Life Policies
These are policies meant to bridge the gap between the term and whole life insurance. You can determine the age at which coverage ends. This can be at a specific point in time, as would be the case with a term policy, or you can choose to have the policy in place until death, as a whole life policy would be.
Premium payments remain constant, but a guaranteed universal life policy does not have cash value the way a whole life policy does. It stands to reason that the price for this type of insurance stands betwixt the price paid for term policies and whole life coverage.
Guaranteed universal life coverage makes sense for senior citizens who want to minimize estate taxes, leave a legacy endowment, pay funeral costs, boost pension benefits or pay caregivers who help during the final years.