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How Much Life Insurance Do Seniors Need?

By Jessica Sillers Jul 26, 2022

In this article

Do Seniors Need Life Insurance?

What Kind of Life Insurance Is Best for Seniors?

How Much Life Insurance Seniors Need

Many conversations about life insurance center on young families, but life insurance can be a lifelong priority. Seniors have multiple reasons to consider life insurance, from covering their own final expenses to providing ongoing support for loved ones (more than half of grandparents provide financial support for their families). Seniors also have their own balance of factors such as age, health and coverage needs that influence which policy is the best fit for their needs. 

If you’re shopping for life insurance in your 50s, 60s or 70s, these insights can help you determine what type of insurance and coverage amount could fit what you’re looking for.

Do Seniors Need Life Insurance?

Not all seniors need life insurance. In many cases, life insurance is best for people who have financial dependents they’d want to provide for in case they pass away. Many seniors don’t have dependents anymore because their kids live independently and support themselves. Seniors may also have saved enough money to feel comfortable “self-insuring” and relying on their own savings or investments to cover expenses that come up. In these situations, they don’t need to worry about taking out a life insurance policy just to have one handy.

But for other seniors, life insurance plays an ongoing role in a well-rounded financial plan. Some seniors have lifelong dependents, such as children who require care in adulthood. Other seniors may be involved financially supporting new dependents, such as paying a grandchild’s school tuition. More than 26 percent of seniors age 65 to 74 were in the workforce in 2020. If loved ones like a spouse, child or grandchild rely on your income, it can be smart to consider a life insurance policy.

Life insurance can also be a good tool to consider if you are low on savings. Even if loved ones aren’t dependent on your income, they may appreciate help paying for final arrangements for you. Some seniors may look to life insurance as a potential option to cover final expenses or leave money for loved ones.

What Kind of Life Insurance Is Best for Seniors?

Life insurance options can be more limited for seniors, so part of finding the right option is considering what’s available to you. Your age and health affect which kinds of insurance you are eligible for. Different forms of life insurance have their own advantages and disadvantages.

Term life insurance

Term life insurance covers you for a set amount of time. Your age affects premium costs and the term lengths available to you. If you’re in your 50s, you probably won’t be eligible for a 30-year term policy, but it’s possible that 15 years is right for you to pay your mortgage or cover the income you would’ve contributed until retirement. Advantages of term life insurance policies include that they’re less expensive than permanent life insurance, and often allow much higher coverage amounts than final expense insurance.

Term life insurance often requires a medical exam or detailed medical information. This type of insurance may be best for seniors who are still in good or excellent health, and who are interested in insurance coverage for a specific period of time (e.g., until their grandchildren graduate).

Whole life insurance

Whole life insurance is a form of permanent life insurance. You’re covered for your whole life as long as your premiums are current, and your loved ones are guaranteed a death benefit. Whole life insurance policies generally have a cash value component that you may be able to borrow from while you are living, as well.

Whole life is more expensive than term life insurance for the same amount of coverage. Generally, you can expect to pay many times more per month for your policy, depending on factors like your age and the coverage amount.

Permanent life insurance policies are typically the best fit for people who can comfortably afford higher premiums, and who prioritize a guaranteed benefit and cash value component.

Final expense insurance

Final expense insurance is a type of permanent life insurance policy designed to cover final arrangements. Typically, that means funeral costs, although the beneficiary doesn’t have to use the death benefit for funeral expenses. For example, they might use the money to cover fees for professional cleaners or landscapers to help prepare your home for sale.

Final expense insurance tends to come with low policy limits (upper limit varies by provider, but is often $25,000 to 40,000). One big advantage is a guaranteed payout because the policy is whole life insurance. Additionally, final expense premiums are often lower than many whole life policies because the coverage amounts are typically lower. Final expense insurance is usually guaranteed or simplified issue, which means coverage and rates may not be based on your health. That’s another advantage if you are in poor health.

Final expense policies are best for people who want coverage primarily to help their families handle funeral expenses and other incidentals, or whose health or age makes them ineligible for other forms of insurance. If you’re concerned about qualifying for insurance or affording high premiums, a policy that offers guaranteed coverage at affordable rates (like Fabric’s policy for seniors, issued through our partners at Gerber Life Insurance) can be a great solution.

Riders to consider

Some life insurance policies, including some term life policies, may offer accelerated death benefit or long-term care riders. Adding these measures to a standard policy may give you the ability to use some of the face value of the policy toward expenses while you’re still living, like long-term care or final medical expenses.

How Much Life Insurance Seniors Need

How much life insurance coverage is right for you depends on several factors. One is how much coverage you can realistically get (and afford). If your health means guaranteed issue or final expense insurance is your best option, you may only be eligible for a maximum of $25,000 to $40,000 at most companies.

Calculate your financial priorities. Estimate what final arrangements are likely to cost. If you’re taking care of an ongoing cost for a family member, like bills or tuition, how much coverage would you need to replace your contribution? When you add up the expenses you’re paying for and compare them to your savings, you can get a clear idea of how life insurance can help cover gaps. While younger people just beginning their family might benefit from a $500,000 or even $1 million policy, many seniors may find that their life insurance coverage needs are much lower.

If you’re looking for guaranteed coverage as a senior, Fabric recommends policies from our partners at Gerber Life Insurance.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards. This article has been reviewed and approved by a compliance professional who is a licensed life insurance agent.

Fabric by Gerber Life exists to help young families master their money. Our articles abide by strict editorial standards.

Information provided is general and educational in nature and is not intended to be, and should not be construed as, financial, legal, or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. We make no warranties with regard to the information or results obtained by its use, and disclaim any liability arising out of your use of, or reliance on, the information.

Fabric by Gerber Life offers a mobile experience for people on-the-go who want an easy and fast way to purchase life insurance.

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Written by

Jessica Sillers

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© 2022 Gerber Life Agency, LLC

Term Life Insurance Policy Series ICC22 2205-4004 WSA and Accelerated Death Benefit Rider policy series ICC22 2205-2623 WSA (and state variations where applicable) issued by Western-Southern Life Assurance Company, Cincinnati, OH which operates in DC and all states except NY, and distributed by Gerber Life Agency, LLC using Fabric Technologies. Gerber Life Agency, LLC is an affiliate of Gerber Life Insurance Company (est. 1967). All are members of Western & Southern Financial Group (Western & Southern). Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Product provisions, availability, definitions and benefits may vary by state. Payment of benefits under the life insurance policy is the obligation of, and is guaranteed by, the issuing company. Guarantees are based on the claims-paying ability of the issuer. Products are backed by the full financial strength of the issuing company.

All sample pricing is based on a 30-year old F in Excellent health for the coverage amount shown and a 10-year term policy, unless otherwise stated. Gerber Life Agency, LLC (GLA) is an insurance agency licensed to sell life insurance products. GLA will receive compensation from Western-Southern Life Assurance Company for such sales. The NAIC Company Code for Western-Southern Life Assurance Company is 92622.

Western-Southern Life Assurance Company's A+ Superior A.M. Best Rating: Superior ability to meet ongoing insurance obligations (second highest of 13 ratings; rating held since June 2009). Ratings are subject to change from time to time. The ratings shown here are correct as of 09/03/2022. For more information about a particular rating or rating agency, please visit the website of the relevant agency.

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