Finding the Best Life Insurance for Retirees and Seniors

Finding the Best Life Insurance for Retirees and Seniors

Many retirees and seniors find they can still benefit from life insurance. If you are a senior citizen or in retirement, here are some considerations to help you determine if you need life insurance and what type may be best for your situation.

Use Life Insurance To Help Pay Final Expenses

Almost everyone has final expenses. These costs can include funeral, burial, medical bills and expenses related to settling the estate. According to, in 2021 the average funeral with a viewing and burial cost $7,848 and a funeral with cremation cost $6,971 on average.1

Are you concerned that it may be difficult for your family to come up with that sum quickly? Life insurance can help cover these final expenses. This often takes the form of a smaller whole life insurance policy with guaranteed premium and death benefit amounts.

Getting one of these final expense policies can be simple and quick.  These policies typically don’t require medical exams or tests. Instead, your answers to a series of health questions will determine eligibility. Some may even be guaranteed issue up to a certain amount of coverage.

Benefits for Health Issues and Long-term Care

In 2020, almost 70% of people 65 years and older were expected to need some form of long-term care — though it was estimated that only 35% would go to a residential facility.2 Many just need some assistance with everyday tasks like dressing and bathing. Others may suffer a fall that requires a temporary stay in a nursing facility to get back on their feet. No matter what form it takes, long-term care can be expensive. The median annual cost for a private room in a nursing home in 2021 was $108,405.3 And, Medicare may not provide benefits if the care isn’t medically necessary.4

If you need long-term care, life insurance may be able to help you pay for it. Many policies offer “living benefits” that can pay out all or a portion of the death benefit early under defined circumstances, like terminal illness, nursing home confinement or a debilitating chronic condition. These may take the form of an optional add-on (called a rider) with an additional cost. This cost typically remains fixed for the life of the policy.

For example, let’s say John has a $200,000 life insurance policy with a chronic condition rider.

  • If he doesn’t develop a chronic condition, his named beneficiary will get the full $200,000 when John passes away.
  • If John is diagnosed with a covered condition, he would have the option of receiving part or all of the current value of the death benefit, subject to the limits and maximums of the rider. Any remaining portion of the death benefit would be paid out to the named beneficiary at his death.

Benefits are generally tax-free and can either be based on the cost of care — or available at the discretion of the owner depending on the specifics of the policy. It may be easier for middle-agers and retirees to qualify for life insurance than long-term care insurance.

Extra Funds in Retirement

Cash value from a life insurance policy can be used as supplemental retirement income or emergency funds. Policies with cash value include whole life and most universal life policies, along with some non-traditional term life products.

Just keep in mind that this is a longer-term strategy (think 10-15 years or more) since it takes time for the cash value to build up. Also, be sure you know the rules to access your cash value.

Coverage for a Mortgage or Other Ongoing Payments

If you have debt you may want to evaluate whether you have enough liquid assets for your family to make the debt payments if something were to happen to you. Remember, it can take time to prepare and sell a house (or other assets) before proceeds are available to help.

Term life insurance can be an affordable tool to provide funds to pay off a mortgage (or other installment loan) should something happen to you. You can match the policy’s initial term period with the duration of the mortgage and the coverage amount with your current balance.

Term life is a good option for budget-sensitive consumers interested in covering specific costs or replacing a breadwinner’s income. Just note that, in general, traditional term life doesn’t have cash value, can have fewer living benefits and may have few options if your needs change later.

You Don’t Have to Figure It Out Alone

These are just a few reasons seniors and retirees may consider life insurance. Other reasons may include creating an income stream for a surviving spouse, helping your adult children protect their family, giving grandchildren a resource for launching into adulthood, supporting a favorite charity or efficiently transferring assets in a tax-advantaged way.

Your local independent agent can help you evaluate your needs and options. And, if you do decide to buy life insurance, your agent can help you select coverage that’s a good fit for your needs and budget.