Term Life Insurance: Age Limits And Options

Life insurance is a tricky topic, and the answer to the question of when to get it varies from person to person. The general consensus is that the younger and healthier you are when purchasing a policy, the lower your premium will be. This is because, as we age, we are at a higher risk of developing health conditions, which can result in higher mortality rates and insurance rates. So, if you're considering getting term life insurance, it's generally recommended to do so sooner rather than later. However, it's important to consider your personal and financial situation when making this decision. If you have financial dependents or significant debt, it might be a good idea to get life insurance. On the other hand, if you're single with no dependents and minimal debt, you may not need it. Ultimately, the decision to get term life insurance depends on your individual circumstances and priorities.

Life insurance for seniors

Types of Life Insurance for Seniors

Term Life Insurance

Term life insurance is a popular choice for seniors as it allows them to choose the specific length of their plan, typically 10, 20, or 30 years. The older the policyholder, the less variety there may be in term lengths, and the fees may rise as you age. However, term life insurance can still provide benefits for loved ones at a reasonable cost.

Whole Life Insurance

Whole life insurance provides coverage for the entire life cycle of the policyholder. Unlike term life insurance, the benefits of whole life insurance are typically payable to the beneficiary regardless of when the insured passes away. Whole life insurance can be a good option for seniors who want to ensure their family receives benefits upon their death. Additionally, whole life insurance offers a cash value growth component, allowing policyholders to borrow against or withdraw from it over time.

Final Expense Insurance

Final expense insurance is a permanent life insurance policy that offers a small death benefit to cover funeral costs, burial costs, and other end-of-life expenses. This type of insurance has lower premiums than other permanent life insurance policies due to its smaller death benefit. Final expense insurance may not require a medical exam, making it a convenient option for seniors.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance is a type of whole life insurance that does not require a medical exam, making it suitable for seniors who want quick and convenient coverage. These policies usually have a low face value and may have a waiting period during which coverage is not active.

Simplified Issue Life Insurance

Simplified issue life insurance provides a middle ground between traditional policies and guaranteed issue life insurance. It offers a quicker application process and no medical exam, but it does ask some medical questions. Simplified issue life insurance has lower premiums, cash value, and smaller coverage amounts.

Factors Affecting the Cost of Life Insurance for Seniors

Several factors can impact the cost of life insurance for seniors, including age, gender, health status, smoking status, hobbies, and the type of policy chosen. Premiums generally increase with age, and men tend to pay more than women due to their lower life expectancy. Health is also a crucial factor, with personal or family health history potentially resulting in higher premiums. Seniors who smoke may pay higher premiums, but quitting for 12 months or more can lead to being classified as a non-smoker. Permanent life insurance policies, such as whole life insurance, cost more than term policies due to lifelong coverage and cash value. Additionally, insurers may charge higher premiums for certain hobbies or lifestyle pursuits that are considered high risk.

Life insurance for couples

Life insurance is essential for couples who have dependents or rely on each other financially. There are several options available for couples, including individual life insurance, joint life insurance, and group life insurance offered through employers.

Individual life insurance

Both partners buy separate life insurance policies, naming each other as the beneficiary. If one of you is the sole breadwinner, then you may decide to buy only one individual life insurance policy. However, you should consider buying two policies if one of you primarily takes care of your children since the cost of childcare can be significant.

Joint life insurance

You buy one joint life insurance policy that covers both of you, paying out either when one of you passes away or only when both of you pass away (known as a survivorship life insurance policy). There are two types of joint policies: first-to-die policies and second-to-die policies. With first-to-die joint life insurance, the surviving spouse will collect the death benefit after the first spouse dies. A second-to-die or survivorship policy is when the beneficiaries receive the death benefit once both spouses pass away.

Group life insurance

If you and your partner can access group life insurance through your employers, you could purchase coverage through them instead of buying individual or joint policies. Group life insurance is one of the most affordable ways to get coverage, but the amount of coverage available can vary by employer, and you may need to add supplemental life insurance to get the coverage you need. Plus, you usually can't keep your coverage if you change jobs.

When to get life insurance

The best time to buy life insurance is usually as soon as possible. That's because the younger and healthier you are when you purchase a policy, the lower your premium will generally be. If you're a couple with no children, life insurance may not be a priority. But if you have a family or are planning on starting one soon, or if you have debt that your partner would be responsible for if you died, you should consider a life insurance policy.

Life insurance for young adults

Life insurance is often associated with milestones such as getting married, becoming a parent, or starting a business. Many young adults delay getting life insurance until they marry, but getting insured at a younger age has its advantages.

Benefits of Getting Life Insurance as a Young Adult

Young adults who are healthier and have a lower risk of medical conditions are more likely to secure lower premiums. Once you’ve obtained a policy, you can typically continue paying the same premium for decades. On the other hand, an older individual who purchases life insurance may pay much higher premiums for the same amount of coverage.

Whole life insurance usually has a cash value component that grows as the policy ages. One of the living benefits of this policy is that you can borrow against the cash value to cover expenses, such as home repairs or medical bills. Getting a policy when you’re younger means that it has more time to accumulate cash value for situations where you really need it.

A life insurance plan can give you added peace of mind knowing your loved ones can be financially protected in your absence. If you have a partner, children, or retired parents, life insurance can help provide them with a degree of financial security. Additionally, you may have large debts, such as student loan debt, that a partner or other loved one may have to pay off if you pass away. Getting a life insurance policy can enable your beneficiary to pay off outstanding debts and remain financially stable in case the unexpected happens.

Types of Life Insurance Policies for Young Adults

Young adults have a variety of life insurance policies to choose from, including:

• Term life insurance offers coverage for a fixed period that typically ranges from 10 to 30 years. After your plan expires, you may be able to extend your coverage, convert your plan to permanent life insurance, or get a new policy.
• Whole life insurance offers coverage for the policyholder’s whole life. It has a guaranteed death benefit that is paid out to the beneficiary once you’ve passed away. The guaranteed death benefit makes whole life insurance more expensive, but it typically has a flexible cash value that enables policyholders to get some living benefits out of the policy.
• Universal life insurance is a permanent plan that comes with more flexibility than other options. This type of policy has a guaranteed death benefit and cash value, but unlike whole life, it offers a flexible premium plan. You may adjust premiums when you desire less coverage and pay higher premiums when you want to increase coverage.
• Final expense insurance can help you ensure that your end-of-life costs are taken care of after you pass away. With this type of permanent policy, your loved ones can use the death benefit payout to help cover any pending legal fees, medical bills, and funeral expenses.
• Guaranteed-issue life insurance allows you to get coverage without having to answer medical questions or take a medical exam.

Since many young adults seeking life insurance are in good health, premiums are typically available that meet most budgets. The average premiums for a 20-year term life policy that offers $500,000 in coverage are $26.98 and $20.92 per month for a 25-year-old man and woman, respectively. Those premiums rise to $30.52 and $25.56 per month for a 35-year-old man and woman.

Life insurance when you have children

When you have children, your life insurance needs as a parent can change. While a term policy might still be the most attractive option, your death benefit amount should likely increase. Consider how much money your spouse or partner would need to raise your children on their own, including higher education costs.

• Mortgage and debts: Ensure that your coverage is sufficient to pay off any outstanding mortgage and other debts that your family would be responsible for in the event of your death.
• Income replacement: Calculate how many years your children will depend on your income and choose a term length that covers this period. The death benefit should be enough to replace your income during these years.
• Education costs: Consider the costs of education, including equipment, uniforms, books, and tuition for private schools or universities. Your life insurance coverage should help cover these expenses if you are no longer around.
• Childcare costs: If your spouse or partner needs to work, calculate the costs of childcare, including nursery or extra care during school holidays.
• Everyday and yearly expenses: Consider the everyday costs of raising a child, such as food, clothing, toys, and activities. Additionally, factor in yearly expenses like birthdays, holidays, and festive celebrations.
• Final expenses: Life insurance can also help cover funeral and burial expenses, removing the financial burden from your loved ones during a difficult time.

It's important to note that while you can name a minor child as a beneficiary, there are legal implications to consider. An alternative is to name your beneficiary as the person who would care for your children if you passed away. You can also add a child life insurance rider to your policy or purchase a separate life insurance policy for your children, providing a death benefit if your child passes away while the policy is active.

The best time to buy life insurance is as soon as possible, as the younger and healthier you are, the lower your premiums will generally be. Life insurance is especially important when you have children, as it ensures their financial security and protects them from potential debt.

Life insurance for single people

Life insurance is often thought of as a product for married people with dependents. However, single people can benefit from having life insurance too. Here are some reasons why a single person might want to consider getting life insurance:

• Final expenses: Life insurance can cover funeral and end-of-life expenses, so your family isn't burdened with these costs.
• Debts: If you have co-signers on any loans, such as student loans or mortgages, life insurance can help cover these debts in the event of your death.
• Supporting family members: If you're single but supporting your parents, grandparents, or other loved ones, life insurance can provide for them if you pass away unexpectedly.
• Business ownership: If you own a business, life insurance can help keep it running after your death, by providing funds to hire a replacement, buy out your partners, or provide for employees.
• Future plans: Even if you don't have dependents now, you might in the future. Buying life insurance while you're young and single can give you access to lower premiums, as rates tend to increase with age and health risks.

Term life insurance typically lasts for a set period, such as 10, 20, or 30 years. When deciding on the length of your policy, consider your financial commitments, such as mortgage payments or supporting children through school. You can also choose annual renewable term life insurance, which allows you to renew coverage each year, although premiums usually increase with each renewal.

The minimum age to buy term life insurance is typically 18 years, while the maximum age is often around 60 to 65 years, although some insurers may offer coverage up to 70 years or more. The younger you are when you purchase term life insurance, the lower your premiums are likely to be, as insurers consider younger people to be lower-risk.

Frequently asked questions