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Life Insurance for Seniors

Many seniors feel that life insurance is unnecessary because they are retired and all of their children are grown independent adults. They don't have anyone that depends on them anymore. People have the common belief that life insurance are mainly for middle-age adults with families who want to protect the people they leave behind in case of death. However, life insurance for seniors can be warranted in various cases.

Spouse's Income Dependent on You

Many people don't realize that pensions and Social Security benefits can be reduced depending on the structure of the pension and social security. For example, if the pension holder is the person that passes, the spouse may get a reduced amount. The same goes for social security checks. If your spouse has budgeted that full amount for living expenses from both pension and Social Security, it may cause hardship in having to realigning the budget to deal with the reduced income. Life insurance can help alleviate the difference and allow the spouse to continue living without the financial stress.

Financial Obligations

If one partner has a lot of financial commitments that can include anything from credit cards, reverse mortgage, mortgage, medical bills, auto loans or other debt, the other partner may face a difficult time in paying those debts off. Even funeral expenses can add up and finding a source to pay can cause extra stress. A life insurance payout can help take care of debts. After the debts are paid off, the money can go towards supporting the other partner and even potentially other family members.

Types of Life Insurance

Insurance agents sometimes push seniors toward a life insurance plan that results in the most commission. Consumer finance experts recommend seniors arming themselves with the knowledge of how different types of life insurance work.

  • Term Life Insurance - Generally the cheapest of the life insurance policies but the easiest to get for seniors. You are essentially betting on how long you will live. When you purchase a term life insurance, you are only going to be insured for a fixed number of years.
  • Whole Life Insurance - This is a cash value insurance policy and offers level premiums and insurance protection for as long as you are alive, as long as you ensure premiums are paid as required to keep the policy in force. Whole life insurance is often used to insure against loss of income and leaving money behind in your estate.
  • Universal Life Insurance - Insurance premiums are paid into an account value, that earns interest. Every month, various deductions, such as a charge for insurance protection, are then made from the account value. You are able to borrow against the account value. The policy is active as long as the cash value is enough to cover the various deductions each month.

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