Shopping for Life Insurance
Purchasing life insurance as a senior requires careful consideration of unique factors that don't necessarily apply to younger buyers. Age restrictions, health requirements, premium costs and coverage limitations become increasingly important as you enter your older years. Understanding your options is essential when comparing types of life insurance for seniors.
AARP Life Insurance from New York Life
AARP offers its members benefits for affordable permanent and term life insurance from New York Life with up to $25,000 to $150,000 in coverage. The partnership between AARP and New York Life provides several advantages for seniors seeking life insurance coverage.
They offer group term and whole life insurance policies for seniors, as well as whole life insurance coverage for minors. There are no medical exams, and you'll get coverage very quickly because all of the policies are either simplified issue or guaranteed acceptance.
AARP's guaranteed acceptance life insurance provides up to $25,000 in coverage with no medical exam and no health questions required. This makes it particularly attractive for seniors with health issues who might be declined by other insurers. The application process is streamlined and coverage begins quickly, providing peace of mind for those who need immediate protection.
The cost structure varies significantly based on the type of policy selected. For example, a healthy, nonsmoking 65-year-old male seeking $25,000 in coverage will pay a monthly rate of $67 for term life, $158 for permanent whole life and $225 for guaranteed acceptance. These rates demonstrate the premium increase associated with guaranteed acceptance policies, but they provide valuable coverage for those who cannot qualify for traditional policies.
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Other Top Life Insurance Providers for Seniors
Several other insurance companies offer competitive options for senior life insurance buyers. Mutual of Omaha stands out as a particularly strong choice for seniors seeking guaranteed issue coverage. Their final expense insurance is widely considered to be the best burial insurance for seniors. Their Living Promise product has no waiting period and is usually cheaper than most other burial insurance companies.
Generally, Mutual of Omaha and AAA have the best guaranteed issue life insurance because they have the lowest insurance quotes for plans without health questions. Mutual of Omaha's competitive pricing and elimination of waiting periods make it an attractive option for seniors who need immediate coverage.
State Farm has earned recognition as a top performer in the senior life insurance market. State Farm offers nearly a dozen term, whole and universal life insurance products, including survivorship and no-medical exam plans. The company's extensive product lineup provides flexibility for seniors with varying needs and health conditions.
Other notable providers include Prudential, Northwestern Mutual and Fidelity Life. However, some companies impose significant age restrictions that limit options for older seniors. Unlike AARP and Mutual of Omaha, Fidelity Life only offers high issue ages on final expense plans. If you want the RAPIDecision Life policy, the maximum age is just 65, while the maximum age for a RAPIDecison Senior Life Term policy is 70.
Types of Life Insurance for Seniors
Seniors have access to several types of life insurance, each with distinct advantages and limitations. Term life insurance provides temporary coverage for a specific period, typically 10, 20 or 30 years. While term policies offer the lowest premiums, they become increasingly expensive with age and most policies expire around age 80. This creates a significant problem since many people live beyond 80 and would lose their coverage when they need it most.
Whole life insurance provides permanent coverage that builds cash value over time. These policies remain in force as long as premiums are paid and offer guaranteed death benefits. The premiums are higher than term insurance but remain level throughout the policy's life. Universal life insurance offers more flexibility in premium payments and death benefits but comes with investment risk that can affect the policy's performance.
Guaranteed acceptance life insurance requires no medical exam or health questions, making it ideal for seniors with serious health conditions. However, these policies typically have lower coverage limits, higher premiums and waiting periods before full benefits are available. Most guaranteed acceptance policies only return premiums plus interest if death occurs within the first two years.
Important Considerations
Several critical factors should influence your decision on what type of life insurance to purchase as a senior. First, carefully evaluate your actual insurance needs. Calculate final expenses, outstanding debts and any income replacement requirements for your spouse. This analysis will help determine the appropriate coverage amount without overpaying for unnecessary protection.
Consider the financial strength and reputation of the insurance company. Look for insurers with strong financial ratings. These ratings indicate the company's ability to pay claims and remain solvent over the long term.
You should also understand the policy's waiting periods and benefit limitations. Many guaranteed acceptance policies have graded death benefits, meaning full coverage isn't available immediately. During the waiting period, typically two years, the policy may only return premiums plus interest rather than paying the full death benefit.
Once you know what to consider, you can start comparing different types of life insurance for seniors and find the right match for your specific needs.