Choosing the Best Life Insurance Company as a Senior

Whether it comes from a health emergency, a milestone birthday or the birth of a new addition to the family, everyone, at some point, realizes that they won't live forever. If you haven't yet thought about life insurance or you want to upgrade your current coverage, it's easy to access a plan that caters for every potential circumstance. With host of top life insurance providers around on the market, you can choose a variety of policies that suit your age, health status, family dependence and other factors. 

With plans aimed specifically at seniors and their unique needs plus the opportunity for younger applicants to prepare for old age inexpensively, it is now almost never too late to access life insurance. If you are a senior looking for the most suitable solution, or purchasing a life insurance policy for your parent, consider closely how many dependents there are, health complications that may occur and any other relevant factors before choosing the right life insurance provider with the right mix of coverage.

Learn more about the top life insurance companies

Types of Life Insurance

If you are scratching your head wondering, “What is life insurance?" Don't worry. It's not as complicated as it sounds. Life insurance ensures that your spouse and children — or any other individuals who rely on your financial support — are covered in the case you die prematurely.

There are two main types of life insurance: Whole Life and Term Life. Term life insurance policies provide protection for fixed periods of time. For example, 10-, 20- and 30-year term policies at guaranteed rates. Whole life insurance has higher monthly premiums and covers you for the extent of your life or until age 120, whichever comes first.

Compare Policies:

Compare Life Insurance Providers for Seniors

Why Choose Term Life Insurance as a Senior?

Because of its temporary nature, term life insurance policies can provide a substantial amount of coverage at a much lower cost than whole life insurance. Keep in mind that those individuals above age 55 will have a hard time accessing some term plans, but it is still quite possible for those in their older years to get terms of 5, 10 or even 20 years at a reasonable price. Term life insurance is adept at covering debts that might pass on to beneficiaries and their family. Some risks appear in the form of higher premiums, and the chance that the policyholder will outlive their policy and be unable to reap the death benefit.

A fitting example of the debt-covering properties of term life insurance is a 20-year mortgage, which can be counterbalanced by a policy that lasts the same period, for the same total amount. If a person owes $300,000 on their mortgage, they can take out a term life policy that pays $300,000 should they pass away within the term. This way, their family or spouse is not saddled with the responsibility of a mortgage and no salary to pay it off.  

Here are some other good reasons why people consider purchasing term life insurance:

• If your spouse would not be able to replace your salary
• If your children need college funding
• If an aging parent or disabled family member relies on your finances or care
• To pay off large loans (cosigned loans still need to be repaid)
• To cover funeral costs
• To leave money behind to your loved ones in times of uncertainty and grief

Don’t Just Rely on Group or Employer Life Insurance

But what about life insurance provided by an employer? If your company offers free life insurance, then sign up for this free benefit — but don't stop there. Many companies offer their employees a certain amount of insurance for free, but this is usually not enough.

Usually, you can purchase supplemental insurance through your company's benefits, but this insurance does not travel with you if you move jobs — unless your company allows you to pay an expensive premium price to take your policy with you. So, if you want to fill in any gaps in coverage and make sure you can take that coverage with you if you change jobs, an individual term life policy might be worth checking out.

Marital Status and Covering a Family

While a couple might be comfortable with a typical term life policy to cover a mortgage, if they get married their combined incomes will increase their coverage needs as well. A baby brings a whole new element into the equation, and thankfully there are policies provided by several companies that cover families well. While there are many individual life insurance plans that have coverage big enough to provide for a family’s financial needs, sometimes covering a child or spouse is a good idea too.

Covering a spouse is important as well. Stay-at-home husbands or wives perform a service that would exponentially increase the costs incurred by their family should they be suddenly absent. Taking out a separate policy is recommended even if the policyholder provides no income, and there are also riders for some whole life policies that provide additional benefits for a stay-at-home spouse.

Family plans are available that cover all members as a unit, with only one premium paid each month to cover a spouse and children as well. These plans start at the policyholder, usually the head of a household, and add premiums per month for spouses and children.

For example, if you’re married with two children, passing away unexpectedly will not only be a huge emotional loss for the family but a huge financial loss - being that you aren’t there to provide anymore. This sounds a bit morbid, but it’s something you need to think about and have a backup plan for - hence the reason it’s such a necessary type of insurance. Learn more about how much life insurance you might need.

How Much Coverage Do I Need?

It can be daunting to figure this out but evaluate your current financial situation today, and what foreseeable expenses will need to be covered 10 to 20 years down the road. 

When deciding how much coverage to purchase, ask yourself these questions:

• How long do I need coverage? If you just got married and are starting a family, you will need at least 20 years of coverage to ensure that your children are provided for until graduation.
• How much can I afford? Find the balance between buying enough coverage and having a monthly premium that fits in your budget. The more coverage you purchase, the more expensive your premium (the amount you pay) will be.
• What will my family need if I pass away today? If something were to happen to you today, there would be a lot of financial expenses placed on your family's shoulders. 

Whether you choose term or whole life insurance depends on your current and future financial needs. Either one is essential to have, especially if you have loved ones who rely on you for financial stability. 

Determining Factors Behind Rates and Coverage

The rate that a life insurance policyholder pays is based on several factors, the first of which is the risk of mortality taken on by the provider. Insurance providers are taking a chance that their policyholder will die before the total premiums he or she paid cover the death benefit. Each life insurance company uses a different underwriting methodology to arrive at the rate that will adequately cover any individual. This underwriting likely considers all current policyholders, the estimated amount of death benefits that the provider will need to pay during the upcoming year, health status, age, smoking habits, income, and a wealth of other personal and financial details.

Interest on investments is another factor that helps determining coverage rates. Providers offer policies to millions of people, and for many of them, it is their sole investment. One way that providers guarantee they have the financial ability to handle such responsibility is by wisely investing policyholder premiums. 

Underwriting 

The underwriting process when applying for term life insurance can be significantly longer and more involved than other types of insurance. This is because companies take greater care—for example, medical examinations—to limit their exposure to risk, due to the level of funding that goes into death benefits. 

Getting the right life insurance policy can give you and your family peace of mind should your circumstances take a turn for the worse. As this is a very important decision that could affect the future of your family, it’s important to compare all the best life insurance companies available and choose the one that best suits your needs.

Disclaimer

*AM Best Rating: A.M. Best's Financial Strength Rating (FSR) is a measure of an insurer's financial strength and ability to pay out claims to policyholders. An "A" rating with A.M. Best indicates that an insurer is considered to be top of the industry in ability to meet ongoing insurance obligations.