A whole life insurance policy could be valuable for some seniors.
When purchasing life insurance, you typically have two main options to consider. For older adults, however, many tend to lean towards term life insurance as the primary choice due to its affordability and shorter coverage period. While term life insurance may seem like a practical choice in certain scenarios, there are compelling reasons to consider whole life insurance as well.
Curious about when whole life insurance might be a suitable choice for seniors? We consulted with experts to shed light on this topic.
Determining the Value of Whole Life Insurance for Seniors
Whole life insurance offers coverage for the entirety of your life, in contrast to term life insurance which only provides coverage for a specified period, usually between 10 to 20 years. Consequently, whole life insurance typically comes at a higher cost.
Despite the increased premiums, experts suggest that the additional benefits of whole life insurance can make it a worthwhile investment for some seniors. One significant advantage is the guaranteed premiums, ensuring that your beneficiaries will have the necessary funds to cover estate taxes, funeral expenses, and any outstanding debts after your passing.
Tim Hoolihan, a life insurance agent at Assurance IQ, highlights that maintaining premium payments can result in a substantial death benefit for your loved ones. If you have significant debts or aim to leave a financial legacy for your beneficiaries, whole life insurance could be a suitable option.
Furthermore, whole life insurance can provide benefits that can be utilized for long-term care expenses, emergency funds, or to supplement your retirement income. Chris Orestis, the president of retirement advisory firm The Retirement Genius, notes that these policies can be borrowed against for tax-free money, with the option to pay back the loan after the insured individual’s demise. Additionally, they may pay dividends to the policy owner and can even be used to cover premium payments during financial difficulties.
Instances When Whole Life Insurance Might Not Be the Best Choice
For seniors in poor health or advanced age, whole life insurance may not be the most cost-effective option, as the premiums could be prohibitively expensive, especially for those with limited incomes. Veronica Fernandez, the founder of life insurance brokerage Secure Senior Benefits and Life Agent School, advises that whole life insurance, like any life insurance policy, is best acquired at a younger age to secure lower rates.
Applying for Whole Life Insurance as a Senior
Seniors interested in obtaining whole life insurance should consider applying sooner rather than later. Orestis emphasizes that purchasing insurance at a younger and healthier age provides more options and lower premiums. It’s advisable to compare quotes from various providers and potentially engage an independent agent to assist with the selection process.
Prepare for any necessary lab work and medical appointments that the insurer may require, and focus on improving your health before applying to secure the best possible premiums. Hoolihan suggests that maintaining a healthy lifestyle, including regular exercise, proper nutrition, and consistent healthcare, can potentially lead to lower insurance rates. For smokers, quitting for a year or more could result in improved premium rates.