How Does Whole Life Insurance For Seniors Work?
Whole life insurance for seniors offers lifelong coverage and cash value growth. Additionally, the premiums and the death benefit are guaranteed to remain the same.
Whole life policies cost more than term life coverage because the coverage is A) permanent, B) accumulates cash value, and C) is far easier to qualify for.
Upon death, the insurance company will pay the death benefit to the beneficiaries as a tax-free cash payment. They can spend that money without restrictions.
Seniors primarily choose whole life insurance to cover final expenses, but also for other reasons, such as estate planning or leaving money as a gift.
What Is The Age Limit For Seniors To Get Whole Life Insurance?
90 is the top-end age limit for a senior to obtain a new whole life insurance policy. However, please note that seniors over age 85 will only have access to final expense whole life insurance policies– not traditional ones. For those under age 85, all standard whole life insurance options are available.
| Age | Typical Coverage Limits | Traditional Whole Life Policies | Final Expense Whole Life Policies |
|---|---|---|---|
| 86-90 | $2K-$25K | Not available | Available |
| 80-85 | $2K-any amount* | Available | Available |
| ≤ 79 | $2K-any amount | Available | Available |
| *Coverage beyond $100K will likely require detailed financial justification for such a high death benefit this late in life. In most cases, large amounts of coverage at this age will only be allowed for those who have substantial estate planning needs. | |||
Does Whole Life Insurance For Seniors Require A Medical Exam?
Nearly every life insurance company now offers simplified issue whole life insurance that doesn’t require a medical exam. For example, burial policies for seniors allow you to get coverage quickly (within 10 minutes) by answering a handful of health questions.
Moreover, many companies also offer guaranteed acceptance life insurance policies that ask no health questions and don’t require a medical exam.
Even if you want large amounts of coverage, such as $500,000 or more, plenty of no-exam senior options still exist.
How Much Does Whole Life Insurance For Seniors Cost?
Why Should Seniors Get Whole Life Insurance?
While every person’s case is unique, these are the main reasons why seniors often opt for a whole life policy:
- Funeral expenses: Whole life coverage provides lifelong coverage, so your funeral costs don’t become a burden for your loved ones. The permanence of the coverage ensures you’d have eternal peace of mind.
- Future medical bills: To be prudent, many seniors buy coverage to ensure potential future medical bills are covered.
- Mortgage: Seniors very often have outstanding mortgage balances. While term life insurance is the ideal policy for covering a mortgage, seniors may find it difficult (if not impossible) to get a new term life policy. This can be due to age alone or health issues, which are more common among seniors. Whole life insurance is much more forgiving of applicants who have pre-existing conditions compared to term life policies.
- Debts: Nearly all seniors (roughly 97%) have non-mortgage-related debts. The policy payout can, and often is, used to cover these liabilities.
- Legacy gift: It’s quite common for seniors to have life insurance specifically to leave behind a financial gift to their loved ones. For this purpose, whole life coverage is ideal because it lasts forever (rather than term coverage, which usually expires at age 80).
- Estate planning: Wealthy families with substantial estates may face death taxes. The death benefit would pay those taxes, so your family doesn’t have to forfeit the estate because it lacks the funds to pay the tax bill.
Best Whole Life Insurance Companies For Seniors
Everyone has unique needs and circumstances, so no one can definitively say that one company is best for everyone. That said, below are the best whole life insurance companies for various reasons:
- Best for final expenses: Mutual of Omaha
- Best for guaranteed acceptance: AAA & Physicians Mutual
- Best for buying entirely online: TruStage & AARP
- Best for paid-up policies: Transamerica
- Best for seniors over 80: Aetna
Whole Life Insurance For Seniors Vs Term Life
Especially for seniors, the differences between term life and whole life insurance must be considered. Yes, term life insurance for seniors is cheaper than whole life. However, cost alone shouldn’t be the only factor in choosing one policy type over another.
Rather, consider all variables (including cost) when determining the right type of life insurance for seniors.
| Policy Features | Term Life Insurance | Whole Life Insurance |
|---|---|---|
| Length of coverage | Usually 10, 20 or 30 years | Forever |
| Fixed premiums | Often yes, but sometimes premiums increase over time | Yes |
| Affordability | Lowest cost | Highest cost |
| Guaranteed death benefit payout | Yes | Yes |
| Cash surrender value | No | Yes |
| Builds cash value | No | Yes |
| Policy loans | No | Yes |
| Potential payout of dividends | No | Yes |
| Medical exam required | Sometimes | Sometimes |
| Ideal reasons to buy | Temporary needs such as covering a mortgage or replacing income | Permanent needs such as paying for your final expenses |
Is There Limited Pay Whole Life Insurance For Seniors?
Limited pay whole life insurance is still available to seniors. Which ones are accessible depends entirely on your age.
Limited pay policies require you to pay premiums only for a specific period of time. After you make all required payments, the policy becomes paid up. At that point, the policy remains active forever without further payments.
For example, a “10-pay” policy will require payments for 10 years.
Limited pay policies cost more because the insurer can collect premiums only for a defined period. Below is a breakdown of which types of paid-up whole life policies are available to seniors by age.
| Limited Pay Policy Type | Typical Maximum Age You Can Buy This Policy Type |
|---|---|
| 7-pay | 75 |
| 10-pay | 70 |
| 20-pay | 60 |
| Paid up at age 65 | 50 |
| Paid up at age 80 | 60 |
| Single premium | 85 |
Frequently Asked Questions
Whole life insurance for seniors costs roughly $107-$360 per month for $50,000 in coverage or $214-$720 for a $100,000 policy. Keep in mind that whole life insurance rates are based on your age, gender, health, and how much coverage you buy.
The AARP life insurance program is worth considering if you need whole life or term life insurance. Their prices are competitive, and you can buy online without speaking with an agent. Yes, some providers may offer lower rates in certain circumstances, but usually not by much. Where they fall short is the lack of an agent. You will not have a single point of contact that you can reach out to for ongoing support needs.
Life insurance is common and worthwhile for seniors because they need it for the same reasons as younger adults. For example, they want coverage to pay final expenses, cover mortgages, leave money to heirs, help with estate planning, and more. While life insurance options for seniors are certainly more expensive due to age (and sometimes health), it’s still a valuable financial asset that solves tangible problems.
Life insurance for seniors over 80 is available, but with far fewer available companies, policy options, and coverage limits. That said, whole life final expense insurance is by far the best policy type for seniors in their 80s, since at this age, life insurance is usually needed only to cover end-of-life expenses.
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- Nationally licensed life insurance agent with over 16 years of experience.
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- Nationally licensed life insurance agent with over 15 years of experience
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- Nationally licensed life insurance agent with over 20 years of experience
- Best selling Amazon author.
Jeff Root is a nationally licensed life insurance expert with over 20 years of experience. He has personally helped over 3000 clients with their life insurance needs. Jeff is a best-selling Amazon author and the managing partner of a highly successful insurance brokerage that manages over 2,500 licensed insurance agents across the USA. He has been a featured life insurance source for prestigious websites such as Forbes, Bloomberg, MarketWatch, Nerdwallet, and many more.
- Nationally licensed life insurance agent with over 15 years of experience
- Best selling Amazon author of five insurance sales books.
David Duford is a nationally licensed insurance expert with over 15 years of experience. He has personally helped more than 1,500 clients buy life insurance. David has been featured as an expert source for highly authoritative publications such as A.M. Best and Insurancenewsnet. He also runs one of the largest YouTube channels to help aspiring insurance agents serve their clients better.
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outstanding mortgage balances. https://www.investopedia.com/many-retirees-are-still-managing-six-figure-mortgage-debt-here-s-fed-data-by-age-group-12066342
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roughly 97%. https://www.lendingtree.com/personal/places-where-people-at-retirement-carry-the-most-debt/
