A Guide to Life Insurance for Seniors

Consider financial goals, age and overall health to determine your best option.

Ben MooreMay 15, 2020
A Guide to Life Insurance for Seniors

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Seniors may have a tough time finding the best life insurance policy, but there are some worthwhile options available. While it’s true that life insurance policies become more costly as you age, there are a variety of policy structures to accommodate older adults, even if you aren’t in the best health.

But do you need life insurance? If you’re debt-free, have healthy savings that allow you to live comfortably and have funds set aside for final expenses, then you might not need life insurance after all. However, a life insurance policy might make sense if you:

  • Have outstanding debt.

  • Need supplemental income for a spouse or child with special needs.

  • Want to cover funeral costs.

  • Are high-net-worth and want to cover estate taxes.

  • Want to provide an inheritance.

Senior life insurance options at a glance

While the best life insurance policy for anyone depends on financial goals, age and overall health, the main types available to seniors are:

  • Term Life, a temporary form of life insurance purchased for a set number of years — typically 10, 20 or 30 years — and usually requires a medical exam.

  • Whole Life, a permanent form of life insurance that accumulates cash value. The cheapest whole life policies require a medical exam, which seniors may have a hard time passing, but there are other options in more detail below.

  • Guaranteed Universal Life, a blend of term and whole life insurance that expires at a set age — typically 90, 110 or 121 — and provides cash value. Most guaranteed universal life policies require a medical exam.

Here's how each policy type stacks up in cost:

Average life insurance rates for women

Age of purchase

10-Year Term life

Guaranteed Universal Life

Ordinary Whole Life

65

$66

$212

$349

75

$192

$416

$623

85

N/A

$1,022

$1,345

Source for all rates: Quotacy. Average rates are per month for a $100,000 policy from the top three carriers for nonsmokers.

Average life insurance rates for men

Age of purchase

10-Year Term life

Guaranteed Universal Life

Ordinary Whole Life

65

$89

$255

$414

75

$267

$489

$712

85

N/A

$1,223

$1,579

Source for all rates: Quotacy. Average rates are per month for a $100,000 policy from the top three carriers for nonsmokers.

When deciding among the options, first consider your financial goals and how much cash you’ll need to accomplish them. A term life policy could cover mortgage payments or other outstanding debts. If your goal is to pay for funeral expenses, you might consider a small whole life policy or pre-need insurance. Or maybe you want to leave a sizable inheritance to your loved ones with a guaranteed universal life policy.

Life insurance companies use medical exams to better understand your health and predict life expectancy, so policies that require them tend to be cheaper. These exams are free, so they may be worth it even if you’re not in perfect health.

No-medical-exam life insurance applications ask about health conditions and lifestyle factors, such as whether or not you smoke. If you’re deemed “high-risk” based on those factors, you could be rejected and limited to insurance policies that skip the medical questions altogether.

What type of life insurance policy is best for seniors?

Term life: The cheapest option

A term life insurance policy could be a good, low-cost option if you’re in outstanding health for your age and willing to take a medical exam. Seniors over the age of 60 can typically secure a 10 or 20 year term life policy, but if you’re over 80, you’ll likely have difficulty finding a policy.

Because term life is temporary insurance, it’s best used to cover outstanding debts, such as credit card debt or a mortgage, or to provide supplemental income for a spouse or other dependent should you die during the policy term.

Term life options for seniors

Insurance Company

Availability by Age Limit

Policy Details

Gerber Level Term

20-year terms available up to age 60

10-year terms available up to age 70

Death benefits of $100,000 - $300,000

Monthly premium stays the same for the life of the policy

Anyone 80 and younger: 10-year terms

Nonsmokers: 70 and younger: 20-year terms 75 and younger: 15-year terms

Smokers: 65 and younger: 20-year terms 70 and younger: 15-year terms

Death benefits of $250,000 and up

Guaranteed level monthly premiums until age 95

Policies in New York have lower age limits

State Farm Select Term

20-year terms available up to age 65

10-year terms available up to age 75

Death benefits starting at $100,000

Option to add additional coverage for you or another person up to age 95

Not available in Massachusetts

Whole life policies: They always pay out

Whole life insurance policies can provide peace of mind because as long as you pay premiums on time, the death benefit will be paid regardless of when you die. An ordinary whole life policy will provide a death benefit and build cash value over time by investing a portion of your premium payments into a savings account. This cash value can eventually be used to take out a loan or can be cashed out completely if you cancel your policy. But whole life policies are more expensive than other types, especially if you purchase them later in life. Additionally, it takes time for the cash value to build — sometimes a decade or more.

There are few whole life insurance options for senior citizens willing to take a medical exam. Gerber Life Insurance offers a whole life insurance policy of $50,000 to $300,000 for seniors up to age 70 able to pass a medical exam.

If you want the guarantee of whole life death benefits, you still have options.

  • Simplified issue whole life insurance skips the medical exam and instead requires you to fill out a detailed health questionnaire. Death benefits can reach up to $50,000.

  • Guaranteed issue whole life insurance, sometimes called senior life insurance or “final expense” insurance, has no medical requirements for acceptance. These policies come with a two-year waiting period before full benefits are available, referred to as the graded death benefit. Unless you die from accidental causes, your beneficiaries will not receive the full amount of death benefits from your policy during this two-year time frame. Instead, your beneficiaries will only receive a smaller payout, such as 110% of the premiums you paid.

Here's how simplified and guaranteed issue policies stack up in cost:

Age of Purchase

Simplified Issue

Guaranteed Issue

Women

65

$48

$65

75

$85

$112

85

$173

$212

Men

65

$65

$87

75

$115

$147

85

$246

$276

Source for all rates: Quotacy. Rates are per month for a $10,000 policy, averaged between the top three carriers for nonsmokers.

Both simplified and guaranteed issue policies can be a great way to cover final expenses or outstanding debt, or perhaps leave a small inheritance.

Whole life insurance options for seniors

Insurance Company

Policy Details

Ages 50 to 80 Death benefits of up to $50,000 Available for AARP members only

Monthly premiums end at age 95, but coverage lasts for your entire life

Acceptance is based on answers to health questions

Ages 50 to 85

Death benefits of $5,000 - $25,000

Ages 50 to 85

Death benefits vary by age

Begins to build cash value after first year of coverage

Ages 55 to 80

Death benefits of $2,000 - $20,000

Potential cash value accumulation

Ages 45 to 75

Death benefits of $2,500 - $50,000

Ages 45 to 85 (50 to 75 in NY)

Death benefits of $2,000 - $25,000

Ages 55 to 80 (50 to 75 in NY)

Death benefits of $10,000

May earn dividends

Ages 55 to 85 (50 to 75 in NY)

Death benefits of $1,000 - $40,000

Builds tax-deferred cash value

Another option for seniors is pre-need insurance, sometimes called burial insurance, used to cover funeral costs. These plans are typically purchased from a funeral home and can only be used to cover final expenses.

Guaranteed universal life: Combines term and whole

Guaranteed universal whole life insurance is a unique blend of term and permanent life insurance. Guaranteed universal, sometimes called “term for life,” is similar to term life in that the policies expire after a certain amount of time. However, instead of choosing a number of years you’ll be covered, you select an age at which the policy will expire. For example, many policies have the option to end at ages 90, 110 or 121.

Guaranteed universal life has lower monthly premiums than whole life, but it still typically offers a small cash value while providing higher death benefits that rival many ordinary whole life policies. Guaranteed universal policies typically do require you to pass a medical exam to qualify.

With death benefits reaching into the hundreds of thousands of dollars, these policies could be a way to leave an inheritance for your loved ones.

Guaranteed universal life insurance options for seniors

Insurance Company

Policy Details

AIG Guaranteed Universal

Available up to age 80

Death benefits starting at $100,000

Potential to grow cash value

Additional features available as add-ons

Nationwide No-Lapse Guarantee Universal

Ages 45 to 70

Death benefits starting at $100,000

Coverage reaches up to age 70 or 120

Possibility to recover premiums paid if coverage is no longer needed

North American Company Custom Guarantee Universal

Ages 60 to 85

Death benefits starting at $25,000

Coverage reaches up to age 120

Determining if you need a rider

Riders are additional options that can be added on to a life insurance policy, typically for an extra cost. Some riders are referred to as “living benefits” because they can be taken advantage of while you are still alive. Riders vary by company and policy, but include:

  • Accelerated death benefit, where the full death benefit amount is paid out early if you’re diagnosed with certain medical conditions and need medical care or nursing home care.

  • Long-term care riders cover the cost of an in-home care provider or nursing home.

  • Children and grandchildren benefit allows for smaller death benefits for children or grandchildren under 18 years old, should they die during the policy period.

Before you shop

When choosing a policy, keep in mind:

  • If you plan to purchase permanent or any other life insurance policy with cash value, work with a fee-only financial advisor to make sure you are getting the best policy for your situation.

  • Shop around and compare monthly premiums and death benefit coverage to ensure you’re getting the best policy for your budget and financial goals.

  • Before you buy any policy, be sure to read the fine print carefully to note important details, such as which causes of death are not covered and what will happen if you can’t pay premiums.

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