Term vs Whole-Life Life Insurance for Seniors

Term Life Insurance expires and very few claims have to be paid, hence why it is cheaper. You can have a larger coverage for a shorter length of time for the same payment.

The reason we do not recommend a solo Term Life Insurance for a senior citizen is that we do not know when we will die. Additionally, an extra day of life beyond our life insurance term should always be considered a blessing and never a curse.

Lady of 97 Outlives her Life Insurance. What Went Wrong?

However, there may be scenarios where a Term Life Insurance along with a Whole-Life and/or Final Expense Life Insurance is the best solution.

Term Life Insurance to pay for the Home Mortgage Balance.

Let’s say you have a balance on your home mortgage and you don’t want to leave that debt for your spouse or your children. Term Life Insurance is the best solution if you can match the duration of the term to the months left to pay off the mortgage. You can even do a decreasing term, where the amount of coverage decreases with the balance of the mortgage.

Even if your spouse plans to sell the house and “downgrade” after your death, the house may need a few fixes to sell for maximum value. Additionally, trying to speed up the sale might result in a much lower sale value. Real estate sales normally take many months, and the escrow alone may take up to 2 months.

Term Life Insurance with 75% to 100% cashback.

Term life insurance with cashback may be a great substitute for a Final Expense Life Insurance. Technically, it is Universal Life with a term. The cashback means that most or all premiums paid are returned at the end of the term. With that money you can invest into a paid-up life insurance policy or an annuity and stay protected for the rest of your life with a plus: you don’t have the monthly payments anymore.

Term Life Insurance till 95 years old.

If you think that based on your family history or your health you may not live past 95 years old and don’t mind the risk, you can get a term life insurance guaranteed level for 30 years at 65 years old. The longest term is 30 years. If you start at 60 for example, it could be level (payment is fixed) until 90. After that, you could renew for an additional 5 years, but the premiums would be extremely high.

Renewable Term to 80 or 90 years old

Renewable Term is a bad type of insurance because it becomes unaffordable when you need the most. If you start your policy paying $20 when you are 50 years old, by the time you turn 85, your payment will be in excess of $200. That’s why most people cancel their renewable term policy or switch to a Final Expense Whole-Life Insurance.

Unfortunately, this type of policy is very popular, and you might immediately recognize names like AARP’s Level Benefit Term Life Insurance, which expires at 80; or Globe’s Term Life Insurance, which expires at 90.

Term Life Insurance’s underwriting is more strict.

It is always better to start your life insurance policy when you are young and healthy. As you age and start taking a couple of prescription medications, you may have to pay a premium when you apply for your life insurance. Term Life Insurance underwriting uses built charts that are more strict and has more medications on the red flag list.

A Final Expense Life Insurance is designed for seniors and has a more lenient underwriting. If you have diabetes, high blood pressure, or has had a procedure done to improve blood circulation, you may still get preferred rates with Final Expense Life Insurance, but would probably have to pay a higher premium or be declined for a Term Life Insurance Policy. A traditional Whole-Life Life Insurance with higher coverages have similar underwriting as Term Life Insurance.

Medical vs Non-Medical

Term and Whole-Life Life Insurance may require a medical examination or not. We recommend the non-medical policies due to (1) the fact that the price difference is minor, (2) you may uncover a health condition that you weren’t taking medication for yet and end up having to pay more or worse not being able to get insurance, and (3) the underwriting is more strick, (4) the process is much more complex, and more information may be required for a final underwriting decision.