How Much Life Insurance Should Seniors Carry?

Having life insurance these days is an option which is available to a wide range of age groups. That being said, term life insurance for senior citizens has become increasingly popular. But of course, one should have a clear idea on how much of this policy should be purchased, if the intention to do so exists.

senior-couple-with-financial-advisorThe amount of coverage for a senior citizen would depend on being able to judge the foreseeable future expenses. If your main objective is just to cover the cost of funeral and cremation then a policy with a face value of $10,000 to $15,000 would be enough. On the other hand, if you are looking at major medical expenses due to health issues then a larger policy in terms of face value would be ideal. A few other aspects which would determine your coverage amount include current debt, available assets and retirement income.

A senior life insurance plan is bought keeping in mind specific needs which may arise due to your old age. When you venture out in the market to buy life insurance for elderly you will have to display “insurable interest” to the insurance company.  What that means is that your close family will suffer some kind of financial loss if you passed away. It re-iterates the basic principle of insurance. You cannot and should not insure something which does not have any negative financial impact when it is gone. It also supports the principle of good faith and keeps people away from using life insurance on seniors as a money making scheme.

Depending on what type of policy you choose, your age and the coverage amount, the cost will vary. Term life insurance is cheaper than whole life. If you are 60 years old then a $500,000 coverage will cost you around $3,000 annually. This is for a 20 year term life insurance policy. If you wish to choose a whole life insurance plan then you will pay higher premiums. Reason being, some portion of your premium will go into the investment portion of your policy known as cash value.

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