Whole Life Insurance for Seniors
Whole life insurance lasts for life, with a premium that is designed not to increase. Here is how it compares with term insurance when you are over 50.
How whole life insurance works
Whole life insurance is permanent coverage. As long as the premiums are paid, the policy stays in force for the rest of your life and pays its benefit when you die, whether that is next year or in thirty years.
- Lifetime coverage. There is no term that runs out.
- Level premiums. The premium is fixed when the policy is issued.
- Cash value. Part of each premium builds a cash value you can borrow against. Unpaid loans and interest reduce the benefit.
- A fixed benefit. The amount your beneficiary receives is set in the policy.
Whole life or term insurance?
| Whole life | Term life | |
|---|---|---|
| How long it lasts | For life | A set period, such as 10 or 20 years |
| Premium | Level for life | Level during the term, then much higher or coverage ends |
| Cash value | Yes | No |
| Cost for the same benefit | Higher | Lower at the start |
| Often used for | Funeral costs and final bills | A mortgage or income while it is needed |
Term insurance can be a good choice for a need that ends, such as a mortgage. For a need that never ends, such as funeral costs, a term policy can expire before it is used. That is why final expense coverage is written as whole life.
Is whole life worth it after 60 or 70?
It depends on what you want the policy to do. A small whole life policy makes sense when the goal is to make sure a known cost is covered, whenever it comes. It makes less sense as a way to build savings, because premiums at older ages are high compared with the benefit.
Before you buy, it helps to ask:
- Do I already have savings or a policy set aside for final expenses?
- Can I comfortably afford this premium for the rest of my life?
- Is the benefit paid in full from the first day, or is there a waiting period?
If the premium is a stretch, a smaller policy that you can keep is better than a larger one that lapses. We can quote more than one amount so you can compare.
Questions about whole life insurance
Will my premium ever go up?
On a standard whole life policy the premium is guaranteed by the contract not to increase. Always confirm this on the policy you are offered, because some other products sold to seniors have premiums that rise in steps.
What is the oldest age to buy?
Many insurers accept applications up to age 80 or 85 for small whole life policies. The limit depends on the company, the policy type and your state.
Can I cancel?
Yes. During the free look period after delivery you can cancel for a refund of premiums paid. After that you can still cancel at any time, and you receive any cash surrender value the policy has built.