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Life insurance for seniors: 3 questions to ask

Life insurance is advantageous for a wide swath of the adult population - including seniors.  Getty Images

Life insurance is considered to be a fundamental part of sound financial planning. Whether you're just getting started with your career or just purchased a new home, life insurance can benefit you. Both men and women, single and married, parent or sibling, can all generally benefit from the financial protections a robust life insurance policy can provide. 

One group often left out of the life insurance discussion, however, is older adults. Life insurance for seniors is often considered not to be "worth it" when comparing the coverage that can be secured versus the cost it takes to secure it. But, despite conventional wisdom, there are some seniors who may actually benefit from taking out a life insurance policy. And they don't necessarily need to break the bank to get it.

With that being said, it pays to do your research. So if you're a senior considering life insurance make sure you can adequately answer a few questions first. You can start by getting a free price quote so you know exactly what to expect.

Life insurance for seniors: 3 questions to ask

Are you a senior considering a new life insurance policy? Then start thinking about how you would answer the following questions.

Why do you need life insurance?

Everyone's personal financial situation is different. What's advantageous for one person may not be for another and vice versa. Accordingly, if you're a senior considering life insurance then start by knowing exactly why you need it. This will help determine how much you ultimately apply for, what type of policy you need and what it will ultimately cost.

For example, if you just need a policy that will cover end-of-life expenses for costs tied to a wake, funeral and burial then you can apply for a term life insurance policy in an amount that would pay for those items. If you want a policy that can pay off outstanding debt or your existing mortgage, however, then you may want a policy in a greater amount than the approximate $20,000 you'd need to cover the end-of-life costs. You also may need a bigger policy if you're leaning on your life insurance as an inheritance for loved ones.

Before proceeding with a policy, first know why you need it. This will better inform your decision-making and ensure that you have a policy that works best for you. 

You can get a free price estimate now to find out exactly what it would cost.

How much can you afford?

A life insurance policy for $1 million or more can be great but if you can't afford the premiums to maintain such a policy then the coverage amount won't really matter. Therefore, you should go into the life insurance application process with a figure in mind. 

What is your budget for a policy? Is it $100 a month or less? Can you afford to cut corners elsewhere and spend more on life insurance? The answer to this question is key in determining if a life insurance policy is worth it for you. 

For example, if you can afford a monthly premium of $80 - and the coverage would cover end-of-life expenses that you otherwise could not afford - then a policy may make sense. Similarly, if you're looking for coverage for hundreds of thousands of dollars but can't afford a premium that allows for that then it may not be valuable to pursue.

Know your budget and then back into a policy that can work for you.

How long do you need it?

Whole life insurance policies last for the duration of the policyholder's lifetime and they come with an attractive cash reserve that can be accessed while alive. But they also tend to be significantly more expensive than term life insurance policies, which only last for a specific time period. 

While whole life insurance and term life insurance both have unique benefits and drawbacks, you'll need to first determine how long you need a policy before committing to one type or another. If you're a younger senior then a whole policy could be beneficial, but for many other seniors a term life insurance policy in a 5, 10 or 15-year term may be more than sufficient to accomplish their goals (and to protect their wallet).

Crunch some numbers and terms to determine which works best for you.

The bottom line

Life insurance is advantageous for a wide swath of the adult population, including seniors. But for older adults to truly gain the most from a policy they will need to proceed smartly. By knowing why they need life insurance, how much they can afford and how long they need it they will better be able to secure a valuable and cost-effective plan.

Start with a free price estimate or use the table below to compare some top providers.

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