It is common for people purchasing life insurance policies for seniors to assume that the policy they’re buying is a permanent policy. This is not always the case, as there are many different types of senior life insurance. The type of policy you choose should depend on your objectives. In order to provide a better understanding, let’s take a quick look at two of the main types of senior life insurance.
The first category to look at is term life insurance. This type of policy covers an individual for a set period of time. For instance, a 10-year term life insurance policy would cover an individual for the next ten years of their life. Should an individual pass away during that 10 year period of time, the insurance policy would pay out the full death benefit to the beneficiaries. If the individual survives beyond that period of time, the policy simply terminates or the rates increase by as much as ten-twenty times the original rate.
These policies are often purchased by individuals who have a set goal in mind. For instance, an individual may have a mortgage that has ten years remaining before the balance is paid in full. They want to ensure that should they pass before the mortgage is paid off, the life insurance policy would pay the balance. Another individual might have an estimated 15 years before they intend to retire. This individual may be concerned about lost income should they pass away before they’re able to retire. A term life insurance policy for either one of these individuals would make sense and satisfy their specific need.
The second type of policy to look at would be a guaranteed life insurance policy for seniors. This senior life policy would cover an individual for the rest of their lives, no matter how long they live. It has become very popular for seniors to use this type of policy to cover things such as their burial costs or final expenses. For this situation, a lot of companies offer what is referred to as simplified issue whole life insurance. This is usually a smaller whole life insurance policy, ranging from $5,000 to $50,000 depending on the individual’s needs. Because of the smaller death benefit, these policies are normally easier to obtain for seniors. The underwriting for health conditions is also not as strict.
As you can see, the type of senior life insurance policy you purchase will vary and is largely dependent on the needs of your situation. Within these life insurance categories, there are still many differences from company to company. Because this can be confusing to sort through, we always recommend that you seek the guidance of a trusted insurance advice.