What Is The Best Life Insurance For Seniors?
If you’re over 80 and you don’t have life insurance yet, now is the time to start thinking The Best Life Insurance For Seniors. Even if you are in good health, it’s important that you have coverage just in case of an accident.
Life insurance will pay for funeral expenses and any other costs associated with your death, reducing the financial burden on your family. Funeral expenses can be well over $10,000, which is a huge cost for most families. However, it can be difficult to get life insurance for people over 80, as insurers do consider it more of a risk.
What Is Life Insurance for Seniors?
Life insurance for seniors is often referred to as final expense insurance or burial insurance. But, seniors are not necessarily limited to these options. The kind of life insurance you can get as a senior is only limited if your age exceeds issue age restrictions or your health precludes you from getting coverage. With 80% of older adults having at least one chronic disease, finding a life insurance company that will give good rates when you are in less-than-perfect health is important.
Why Should Seniors Consider Life Insurance?
It is important to consider life insurance as a senior because it can help cover final expenses. Life insurance is also a strategic consideration for seniors if they have savings or assets. You can consider using a whole life or universal life policy as part of your estate planning to help you leave your savings to your heirs as a tax-free death benefit, or to help them pay estate taxes.
Here’s what you need to know about getting life insurance when you’re over 80.
Burial Insurance Plans
Life insurance plans for older people are typically intended mainly to pay for funeral expenses. Insurers market these as burial insurance plans, and there are even companies that specialize in them. At this age, it’s unlikely that you have young children that need support, so the plan does not provide extra coverage for this. Looking for plans that are designed for this specific purpose will help you narrow down your options.
Another benefit of burial insurance plans is that they do not require a medical examination the way other policies do. At the age of 80, most people have developed medical conditions that would show up in an examination, and this could drive up the monthly premium dramatically. Burial insurance plans recognize that there isn’t a need for a medical examination in this case, although they typically will make you fill out a medical questionnaire.
These policies have a list of pre-existing medical conditions that are completely exempt from additional fees. They typically have a flat rate benefit at around $25,000, although you may be able to find a burial insurance plan with a higher payout.
What Is the Cost of Life Insurance for Seniors?
How much you pay for life insurance as a senior will depend on the type of coverage you decide to purchase. For example, at age 60, you can expect to pay between $100 and $200 a month for $250,000 of term life coverage on a 20-year term.
If you wait until age 75 to buy coverage, your premium will likely increase to between $550 and $876 per month. Guaranteed issue whole life insurance policies are usually available for coverage amounts from $5,000 up to $50,000, depending on the insurer.
These policies have a much lower amount of coverage, so they are often the go-to for affordable easy coverage. Whole life or universal life insurance will be more expensive than term insurance, so policyholders can expect to pay six to 10 times more for permanent coverage because of the cash value element that’s included in the monthly premiums.
What Is The Best Life Insurance For Seniors?
The 7 Best Life Insurance for Seniors in 2021
1: Best Overall: Mutual of Omaha
- Excellent customer service ratings
- Competitive pricing
- Wide range of policies
- Get a policy up to age 85
- Medical exam required for some policies
- Some policies must be purchased through an agent
- Limited riders available
Our top pick for life insurance for seniors, Mutual of Omaha, offers term, whole, and universal life insurance with flexible policy provisions. Term life insurance policies are issued up to age 80 and can be renewed yearly until age 94 with coverage starting at $100,000. Whole life policies are available to applicants up to age 85 with coverage options from $2,000 up to $25,000. The whole life policies don’t require a medical exam or any health-related information to begin coverage.
Mutual of Omaha is fairly competitive in its pricing. Premiums on term life insurance aren’t the lowest available, but they’re not overly expensive, either.
Customer service ratings from various agencies list Mutual of Omaha at or near the top. J.D. Power lists the provider fifth out of 23, and AM Best has issued a Superior rating.23 Great service includes a comprehensive website with easy-to-use tools for choosing a policy and filing claims, as well as phone support and the option to meet with local agents.
Why We Chose It: Mutual of Omaha is the friendliest to seniors, with a range of different policies available to applicants as old as age 85. The company is at the top of its class in customer service, offering support online, over the phone, and in-person with local agents. Mutual of Omaha’s winning combination of pricing, benefits, and service makes them best overall in our review.
2: Best Final Expense Insurance: AIG
- Coverage options from $5,000 to $25,000
- Guaranteed acceptance up to age 80
- Chronic and terminal illness accelerated death benefits included at no additional cost
- Limited benefits for first two years
- Living benefits capped at 50% of death benefit amount
- Negative customer service reviews
Final expense insurance is a term for whole life insurance policies with lower coverage that are geared toward helping pay for funerals and other end-of-life costs. AIG’s guaranteed whole life insurance policies fit the bill for this purpose, with coverage available in amounts between $5,000 and $25,000.
Acceptance is guaranteed for anyone up to age 80 with no medical exams required; this puts AIG ahead of the pack, as many other providers have an age cutoff much sooner than age 80.
In addition to providing peace of mind for covering funeral costs, AIG’s policies give an additional sense of security by providing access to the policy benefits in case of a chronic or terminal illness. While many insurers charge additional fees for living benefits, AIG offers this rider at no additional cost. Depending on the illness, up to 50% of the total policy value can be used toward medical care, assistance, or any other costs.
The main drawback to AIG is its poor customer service ratings. In the J.D. Power 2020 U.S. Life Insurance Study, the provider ranks 15 out of 23 for overall customer satisfaction.
Why We Chose It: AIG makes final expense insurance available at a reasonable price to any applicant up to age 80, years after most competitors stop offering coverage. No medical exam is required, and living benefits are included free of charge, putting AIG at the top for best final expense insurance.
3: Best Term Life Insurance: Banner
- Extremely competitive pricing
- Coverage available through age 90
- Few customer complaints
- Must be 75 or younger to sign up
- Limited policy options
The Banner Life Insurance Company has been in business for 180 years and maintains a positive record among rating agencies. The National Association of Insurance Commissioners (NAIC) reported only five complaints filed against the company in 2019. The insurer also holds a Superior financial stability rating from AM Best.
Operating under the Legal & General brand name, Banner offers term and universal life insurance. However, the scope of policies available is more limited than some competitors, and consumers may be frustrated by the lack of clear policy information on the provider’s website.
Still, for seniors looking for the best price on term life insurance, Banner is the clear winner. While you must be 75 or younger to sign up, coverage can extend until age 90 depending on which policy term you choose.
Why We Chose It: Term life insurance policies get more expensive as the applicant grows older, so it’s hard to find an affordable policy for seniors over 65. Banner provides affordable insurance options with some policies offering coverage up to age 90. For term life coverage, Banner is our top pick in this review.
4: Best Whole Life Policy: MassMutual
- Unique convertible policy
- Comprehensive online tools
- Best for younger, healthier seniors
- Medical exam required within 90 days
- Online application not available for anyone 65 or older
- No living benefits for seniors
MassMutual was founded in 1851 and provides insurance and financial services nationwide. The company maintains an A++ (Superior) AM Best rating, the highest possible rating for an insurance carrier, and excels at both whole life and term policies.6 For this review, though, it is the leader in whole life coverage for seniors.
MassMutual has a unique convertible policy that begins as term life insurance but can be switched to a whole life policy. This insurance plan, called Direct Term, can be purchased online by applicants up to age 64 and is convertible beyond the issue age. Other whole life insurance policies for death benefits over $25,000 for seniors are available by speaking with a MassMutual agent. A medical exam is required within 90 days to sign up for a MassMutual whole life policy. Guaranteed issue policies are not offered and no living benefits are currently available.
While MassMutual’s whole life policies only make financial sense if you anticipate living long enough to pay the premiums for several years, they do have several benefits. For example, you can borrow against the cash value of the policy, your beneficiaries will receive a guaranteed death benefit no matter how long you live, and you may even earn dividends in the meantime.
Why We Chose It: MassMutual’s whole life policies have higher limits than traditional guaranteed whole life insurance geared toward seniors. If you need a policy with a face value significantly greater than $25,000 that won’t run out at the end of its term, MassMutual has the solution and is the clear winner for best whole life insurance.
5: Best for Grandchildren: Gerber
- Premiums will never go up
- Save 10% by setting up automatic payments
- Value doubles once the child reaches age 18
- Maximum death benefit of $100,000
- Lower return than other long-term investment options
- Average customer ratings
Seniors with grandchildren may wish to contribute to their financial future by purchasing a life insurance policy in the grandchild’s name. The Gerber Grow Up Plan was created for this exact purpose. Premiums are started when the child is young, and the policy face value automatically doubles at age 18. When the child turns 21, he or she automatically becomes the policy owner and can choose to either cash in the full value or continue coverage for life.
Premiums on a policy for your grandchildren will be much cheaper than purchasing life insurance for seniors. What’s more, there’s no guarantee they’ll be eligible for life insurance as adults, so this plan starts grandchildren off on a guaranteed path to important life insurance protection.
When you sign up for automatic payments to get a 10% discount on premiums.
While life insurance for grandchildren sounds like a thoughtful gift, it’s important to note that there may be better investment options based on your intentions. For example, if your goal is to start a college savings fund, there are better options such as mutual funds that grow at exponentially better rates. However, starting a child’s life insurance policy ensures they have some protection just in case they develop health issues at an early age.
Why We Chose It: Gerber’s life insurance plan for grandchildren costs just pennies per day in exchange for relatively high benefits in case of premature death. When the child turns 18, the policy’s face value instantly doubles, and your grandchild has the option to receive the cash value as a lump sum payment if he or she chooses.
6: Best for Seniors Over 80: Transamerica
- Policies issued up to age 85
- Many different policy types
- Low premiums for older seniors
- Limited website functionality
- Only available through an agent
- Below-average customer service ratings
Transamerica was founded in 1928 in San Francisco, California, and maintains an A rating with AM Best. Where most life insurance companies won’t even issue policies to seniors over 80, Transamerica will allow seniors up to 85 to sign up for coverage through both term and whole life insurance policies at reasonable rates.
Most of Transamerica’s final expense life insurance policies can be issued up to age 85 with higher death benefit limits than most competitors. You could be eligible for up to $40,000 in coverage from age 56 to 65, $30,000 from 66 to 75, and $25,000 from 76 to 85. The majority of the policies start offering full benefits on day one; other insurers may have a delayed benefit period of up to two years.8
Transamerica is also one of the few life insurance companies that offers term policies to seniors over 80.
One downside of Transamerica is that website functionality is extremely limited. You’ll have to call an agent to get a quote on most policies. The provider also receives customer service ratings from J.D. Power that fall significantly below average.
Why We Chose It: Seniors over 80 may find that their life insurance options are extremely limited, but Transamerica offers nearly all policy types to applicants as old as 85 without breaking the bank. In our review, Transamerica stands apart for seniors over age 80.
7: Best Living Benefits: Prudential
- Living benefits pay up to 95% of full death benefit
- Wide range of policies available
- Competitive pricing
- Living benefits are not available in all states
- Does not offer whole life insurance
- High number of customer complaints
Prudential was founded in 1875 in Newark, New Jersey, and maintains an A+ rating from AM Best. Prudential has over 10 life insurance products that include various term and universal life types. One advantage of life insurance for seniors is that many policies include accelerated death benefits, also known as living benefits.
Prudential offers an impressive range of living benefits with three serious illness riders and three disability riders, available with both term and whole life insurance policies. In most cases, policyholders can qualify if they have been in a nursing home for at least six months and aren’t expected to leave or if they’ve been diagnosed with a terminal illness with less than six months to live.
While most competitors limit living benefits to around 50% of the total policy value, Prudential’s riders allow for up to 95% of total benefits to be accessed depending on the conditions of the illness. The caveat: living benefits must be added when you purchase the policy, and only those up to age 80 are eligible.
Why We Chose It: Prudential offers six types of living benefits that allow the insured to receive up to 95% of the policy value in case of serious illness.
What Does Life Insurance for Seniors Exclude?
As with all life insurance policies, there are a few exclusions seniors should be aware of. Suicide is typically not covered within a certain amount of time from the policy start date, and some specific causes of death like private plane crashes could prevent a payout as well.
Some policies for seniors may delay benefits entirely for the first two years, most often guaranteed whole life policies. Of course, if you withhold information such as preexisting health conditions on your insurance forms, there’s a good chance your beneficiaries will be denied compensation.