Seniors have several life insurance options — term life (if still insurable), whole life, guaranteed issue whole life, and final expense insurance — but premiums are significantly higher than for younger buyers. Whether it's worth it depends on what you need it for: replacing income, covering a mortgage, final expenses, or estate planning. The answer differs for a 60-year-old vs. an 80-year-old.
Life insurance pricing is heavily driven by age and health — both work against seniors seeking new coverage. But the need for life insurance in retirement is also genuinely different than it was during working years. The NAIC consumer guide on life insurance is a good starting point for understanding the product types and your rights as a buyer.
Term life insurance is the least expensive form of life insurance — but availability shrinks with age. Most insurers won't write new 20- or 30-year term policies past age 65–70, and many cap new terms at 10 years for applicants in their 60s. Premiums for a 65-year-old are several times higher than for a 40-year-old with the same health profile. Term makes sense when you have a specific, time-limited financial obligation (a mortgage with 10 years remaining, for example).
Guaranteed issue whole life policies accept applicants ages 45–85 with no medical exam and no health questions — you cannot be turned down based on health. The tradeoffs: premiums are higher, coverage amounts are limited (typically $2,000–$25,000), and most policies have a graded death benefit (if you die within the first 2–3 years, the policy only returns premiums paid plus interest, not the full face amount). These policies are appropriate for final expense coverage when health makes other options unavailable.
If you have an existing permanent life policy with cash value, you have options beyond simply holding it: take a policy loan, surrender it for cash, exchange it for an annuity (a 1035 exchange), or reduce the death benefit to reduce or eliminate premium payments. The IRS explains 1035 exchanges for seniors considering reallocating life insurance cash value. A licensed insurance professional can help evaluate whether holding, surrendering, or exchanging is optimal for your situation.
Some seniors are targeted with complex universal life or indexed universal life products that have low guaranteed performance floors and high internal fees. The FTC and NAIC both publish consumer resources on identifying unsuitable insurance sales. Review any illustration carefully — look at the guaranteed column, not only the projected column.
Browse all answers
More answers to common questions about financing, banking, and credit.