Life insurance can be a complex financial consideration, and older adults might wonder if they even need it — or whether it's too late for them to buy it. Find out why you might still want life insurance as a retired senior below and whether you can still buy it.
Younger adults often buy life insurance because they want to protect any dependents. If someone is the breadwinner for their family, they may want to ensure there's enough money to cover a few years of expenses. That gives the family time to recover some from a sudden loss and find a way to make ends meet in the future.
In these situations, people may also buy life insurance to help cover major costs for children or other dependents. For example, a parent may want to ensure college tuition can be paid for if something happens to them.
But a retired senior usually doesn't have these types of considerations. You may not be worried about leaving enough behind to cover costs for your children, as any children may be adults who are no longer dependent on you. That doesn't mean life insurance isn't a good thing to have. Here are a few reasons you might want to buy life insurance as an older adult:
The older you are, the harder it can be to find a life insurance policy you can buy. Many term-life insurance providers don't sell to anyone over the age of 75, for example. However, there are companies that specialize in this niche and do sell life insurance to people of almost any age.
Even then, your options will be somewhat limited. Life insurance companies play a risk game when it comes to profits, especially when selling term-life insurance. These products are issued for a set term period, typically 5, 10, 15, 20 or 30 years. The life insurance company is effectively betting that the person buying the policy will outlive it. That means they'll pay premiums but never require the benefit.
With term-life policies, once you're out of the term, you don't pay any more premiums. You're also no longer covered by the insurance.
If you're 65 years old, life insurance companies are not going to bed on a 30-year term policy. They will often, however, bet on a 5- or 10-year policy.
Older adults may also be able to purchase whole life policies. These are different from term-life policies because they're permanent. Once you pay the total purchase price for the coverage, you have the coverage for life. For this reason, whole life is much more expensive than term life. Seniors might consider buying a small whole life plan outright or via a few years of premiums if they want to cover a single expense, such as final arrangements.
As an older adult, you might also want to look for simplified insurance policies that don't require medical exams and extensive underwriting.
Financial and living decisions just before and during retirement should be made with an eye toward your budget, your goals in life and your overall preferences. Whether you're considering moving into an assisted living community like the one at Bethesda Gardens in Arlington or you're weighing life insurance options, take time to consider all relevant factors.
You may also want to talk to a financial advisor and/or estate planning professional. They can help you understand the benefits of life insurance and whether they're worth any expense you might incur with premiums.
