Life insurance is a critical part of planning for the future, including obtaining coverage for funeral costs and other final expenses – especially for seniors. With so many different options available, it can be overwhelming trying to decide which type of life insurance is best for you. Two of the most common types of life insurance for seniors are term life insurance and whole life insurance. Here are the most important things to understand about the difference between term life insurance and whole life insurance for seniors.
Term life insurance provides coverage for a set length of time, like 10, 20, or 30 years. If the insured passes away during the term, then the beneficiary(ies) will receive the death benefit. However, if the insured lives longer than the term, the policy will expire, and therefore will not pay out a death benefit. Because term life insurance does not last forever and expires, it is generally less expensive than whole life insurance.
However, for seniors who do not have any life insurance coverage, term life insurance can be very risky. Life insurance becomes more expensive as you get older, so outliving a term life policy as a senior can become very costly. Additionally, life insurance qualification is based on age, gender, and health, and depending on good health as you are again is not recommended for an important decision like life insurance planning. Most term policies have set premiums that last for a set length of time, but some policies have premiums that increase every 5 years and where the policy will eventually expire at age 80, 82, or 85. These types of policies are enticing due to their lower premiums when you obtain the coverage, but these are the most dangerous for seniors who want to make sure their family receives the death benefit at the time of death.
Whole life insurance provides coverage for the insured’s entire (whole) life. Whole life insurance also builds cash value, which the policyholder can borrow against or withdraw when needed. Whole life insurance is generally more expensive than term insurance because it provides coverage guaranteed to last for life and because it builds cash value.
For seniors who want coverage for their funeral cost and final expenses, whole life insurance will be the best choice for the peace of mind that comes with having a death benefit guaranteed for life. Additionally, the cash value component of whole life insurance can is an added benefit for those who may need to borrow some funds at a later time.
In conclusion, when deciding between term life insurance and whole life insurance for seniors, it’s important to think about your financial goals, budget, and needs. While term insurance is tempting because it is less expensive, whole life insurance provides peace of mind through coverage guaranteed for life, and also has a savings component. Before making a decision, it’s a good idea to speak with a licensed insurance advisor to make sure that you choose the best option for your needs.