If you are a senior citizen and others still depend on you financially, you might need term life insurance to protect your family if you aren’t able to self-insure. Of course you should do what it takes to reduce the cost. But if you need coverage you need to do something about it. If that’s the case, here are the steps I recommend you take:
1. Join organizations.
There are many organizations that offer life insurance discounts for their members. I’m told that AARP offers such programs although I’m not familiar with it. Find out if other organizations you belong to offer group term policies and if you can participate.
2. Take advantage of your employer.
If you are working, there is a chance that your employer offers a group plan too. If the company doesn’t, ask them to look into starting one. It doesn’t have to cost them anything and it would be a great benefit – especially to people like you.
Note – If you are a senior you may no longer need life insurance. Even if you do, you might not need that much or for very long. If you evaluate your life insurance needs a little differently you might just save a ton of money.
3. Get lots of quotes.
Insurance companies are run by actuaries. These are the people who determine the likelihood of some terrible thing happening to you in any one year. Each company calculates risk differently. You want to get in front of the company with the most optimistic actuary – so look around. Just get quotes…it doesn’t cost a thing.
4. Consider whole life insurance.
I’m not a fan of whole life insurance, but this is one of the few cases where it might work. If you are very healthy, you might look into a whole life policy that doesn’t build up much cash value. This, in essence, is a term policy, and depending on your age, health and the number of years you’ll need the coverage, it might be cheaper than a term policy.
I want to caution against going for a guaranteed issue life policy. Those are the ones they advertise late at night because they know old geezers never sleep.
I don’t like these policies because they have some provisions which may preclude you from ever collecting the benefits. You can read more about guaranteed issue life here. The only time you’d consider this coverage is if you have absolutely no alternative.
And that brings up a very important point.
No matter what policy you buy, make sure you read the fine print. That goes for group policies too. You want to make sure that the policy is issued by a reputable firm, that they’ll pay off if you die and they won’t deny benefits if you die within the first three years of coverage.
Of course, while you’re getting your insurance in place, it’s smart to make sure all your other financial and legal matters are in order too.
What steps have you taken as a senior to get proper life insurance? Are there any other tips you can share?
Lois Keel says
O.k. so I have only the tiniest of life insurance policy, am about to be 70, had cancer in 2013 (doctor says he has to give a possibility of return, but figures it’s 99% likely to be totally gone). Longevity is fairly likely in my ancestors, so I want to find a policy to cover funeral expenses. The rest is unlikely to be a problem being paid off, but have seen funerals need paying off before other savings may be released.
I’m self-employed; religious affiliation insurer says “after 5 years cured, but it will be expensive.”
Term insurers over time might consider me too old, right?
Suggestions?
Neal Frankle, CFP ® says
They might – and they might not. What do you have to lose by applying? Have you been turned down?
Thomas Rockford says
Life insurance rates for seniors will always be very expensive, for good reason too. This is why I recommend people get insurance when they are young – to avoid these high rates. The “join organizations” tip, is a good one though, and it could do a bit to cut back on the high costs.
Neal Frankle, CFP ® says
Thanks Thomas. If you need it, your suggestion is a good one. Not everyone does however IMO. Thanks for your thoughtful remark.
Jeff Jackson says
Neal,
Nice article. I am a bankruptcy attorney and have many elderly clients. Life Insurance costs are always a big issue. You post gives some great advice and recommendations for where to look for cheaper alternatives.
Kyle says
Purchasing insurance is confusing with all the policy types. Those are some helpful tips for us to consider before we make a decision.
Neal says
Excellent point Split Cents. Thanks. Very helpful.
Split Cents says
So helpful! Life insurance can be completely baffling with all the policy types and options. Most state Attorneys General also have a website and publications with helpful overviews of life insurance, and a list of insurers that offer policies. Because insurance companies tend to be regulated by the states, most states also have an insurance division that is a great place to check for complaints filed against the company, etc