Does Term Life Insurance for Seniors Make Sense?
Term life insurance is a type of policy that helps protect you only for a period of time, or term, typically from five to 30 years. If death occurs during that term, your beneficiary or beneficiaries are paid. But if the term life insurance period expires before your death, your money is not returned even if no claim was filed, and continuing coverage through a new policy at your previous rate is not guaranteed.
Term life insurance for seniors may not be best option
Renewing a term life insurance policy can become more difficult as you age. So the answer to “Does term life insurance for seniors makes sense?” might be “No.” Another choice that may be better for seniors is whole life insurance.
Whole life policies typically last for the life of the policyholder and pay benefits regardless of when death occurs, as long as the policy is maintained (premiums continue to be paid on time). Whole life insurance also offers stability, with premiums that are guaranteed not to increase and a benefit to be paid to your named beneficiaries when you die. Some policies can accumulate potential cash value that grows on a tax-deferred basis.1 These polices can distribute payouts in the form of a loan for monetary needs that might come up for you or your loved ones, but it’s important to remember that these loans will reduce the policy benefit to be paid when you die.
1 Consult with a professional tax and/or legal advisor before taking any action that may have tax or legal consequences.