How We Chose the Best Term Life Insurance Companies for Seniors
To ensure that we provide you with the best possible options, we researched and considered many different aspects of the provider’s offerings and the customer experience, including:
- Cost of coverage (premiums)
- Changes in costs over time
- Diversity and availability of term policies
- Age restrictions
- Customer service quality
- Plan flexibility
- Ability to convert to whole or permanent life insurance
||Age limit (term)
||$25 per month
||Strong financial ratings, some refundable policies
||$15 per month
||Fixed monthly payments
||$12 per month
||Access to AARP resources
||$31 per month
||Fixed monthly payments
||$15 per month
||Easy conversion from term to whole life
*Premiums for term life insurance plans of 20 years, ranging between $100,000 and $250,000 in coverage (as of 2022). These are the lowest available premiums; actual premiums will vary based on age, location, health, and other factors.
How Does Term Life Insurance Work?
Term life insurance is pretty straightforward. You choose the length of time you would like coverage (typically ranging between 10 and 30 years) and pay a monthly premium. If you outlive your coverage, you often have the option to renew your plan or convert to a whole life policy. However, some carriers do not grant either of these benefits. So, if you outlive your coverage, you will not get any payout.
Unlike many whole life insurance policies, term policies do not have the ability to accrue cash value. Instead, they simply provide the possibility of a death benefit payout if you do not outlive the term of your policy. Like a whole life policy, you can choose the amount of your death benefit. Death benefits vary widely, with some as low as $5,000 and others as high as $10 million.
How Much Does Term Life Insurance Cost?
The cost of term life insurance is generally lower than whole life insurance because it only offers a death benefit. The exact costs depend on the provider, your age, health, gender, location, and any add-ons to your plan. The current average cost of $250,000 coverage for a 60-year-old applicant is $66 per month.1 This average increases with age, but many term life insurance providers offer fixed monthly premiums for the duration of the policy. That means you could end up saving thousands on term life insurance premiums by purchasing a plan as soon as possible.
Term vs. Whole Life Insurance
As the names imply, term life insurance only lasts for a select term, while whole life insurance lasts for the rest of your life (as long as you stay current with the payments). As previously mentioned, whole life insurance is typically more expensive, but it also ensures that your beneficiaries will get a payout. This is not always guaranteed with a term life insurance plan, as you could always outlive your coverage.
Many whole life insurance plans accrue value over time. You can make withdrawals against your death benefits to help pay for medical costs or other expenses. For this reason, whole life insurance can provide greater financial security for you and your beneficiaries.
This doesn’t mean that whole life insurance is better than term life insurance; it just depends on your budget and needs. Typically, term life insurance is best for those who want short-term coverage to protect their family. For example, if you have major financial obligations like a mortgage or dependents, a term plan may be the most affordable and practical option. Alternatively, if you want to guarantee a death benefit without the need to convert or renew your plan, you can opt for a whole life insurance plan.
Tips for Choosing the Best Term Life Insurance for Seniors
The term policies listed above provide some great options, but you may still want to do your own research. Here are a few tips to help you choose the best term life insurance policy for you:
- Read the fine print to see if and when you can renew or convert your policy.
- Shop around to find the best balance between a larger payout and a lower premium.
- Consider the needs of your beneficiaries before choosing how much coverage you need.
- Ask your provider if they offer fixed monthly premiums; if not, you can expect your premiums to go up every year.
- Every insurance provider has its own advantages and disadvantages; think about the things that matter the most to you (premiums, customer service, plan variety, etc.) before choosing a plan.
- Think about how life insurance can work as part of your overall retirement and estate-planning goals.