Insurance rates and policies have changed over the past year due to the global pandemic. Despite this, term life insurance is still an affordable insurance option for seniors compared to whole life insurance. It may be a little more straightforward and easier to understand as term insurance protects you for a limited number of years whereas whole life protection is full coverage until death. 

But even understanding the fundamental difference between the two, it is always good to understand some of the nitty-gritty that comes with term life insurance. That way you can choose the best rate and best policy. 

What Is Term Life?

Term life insurance is insurance that only offers protection for a predetermined amount of time. It could be 5, 10, 20, or 30, years of insurance. This is the major distinguisher between whole life and term life insurance. 

It often is referred to as “pure life insurance” because its primary function is to protect family members or beneficiaries in the event of your passing. While this may sound grim there are actually quite a few positives that can make term life insurance attractive. 

Positives

Term life insurance offers some great advantages such as:

• Affordability
• Flexibility
• Good Starting Point
• Ease of Understanding 

Affordability:

Term life insurance is one of the, if not the most affordable insurance policies on the market. This is because you are paying a fixed rate for a specific amount of time that was predetermined when you opened the policy.

The line of thinking is that insurance companies hope that they never have to pay out the death benefit or the policy because you will simply outlive the terms. In contrast, whole life insurance premiums are always much higher because the policy is always paid out. Term life insurance, will often expire before you pass away. However, that can be just fine your need for life insurance temporary.

Flexibility:

One of the other important reasons for seniors choosing term life insurance is because of the numerous options to choose from when it comes to a policy. It is possible to start with as little as one year with the option to have an annual renewal. While rates may not be locked in at this price, they still come at a much more affordable premium than whole life insurance. 

One year however doesn’t always make sense for everyone. That’s why you can choose plans around 10, 15, 20, and 30 years. A a 10-year policy may make sense for those who want to cover their child’s college tuition if your plan is to have the tuition paid for within the 10 years. Or if you want the mortgage to also be covered something like a 20-to-30-year coverage plan makes more sense if you recently took out a 30 year loan.

As a client gets older, such as a senior, their needs will change which is great because term life insurance policies allow clients to select new policies when they go with shorter coverage periods. 

Good Starting Point:

Whether you are a young family or a senior, this can be a good starting point if you don’t have available funds for a hefty premium like whole life insurance. With debt and mortgages still needing to be paid off, term-life can help cover these. 

This is because you aren’t adding any cash-value build-up. You are more taking precautions for the debts you owe not to be transferred to anyone else. In other words, this is to prevent a burden from being distributed. And instead you are able to leave something behind for your family. 

Ease of Understanding:

Term life insurance is a favorite. It is simple and no more complex than you pay a cheap rate to provide the coverage you need for a certain amount of time. If you outlive that time, you will renew the policy for another extended period of time. 

Considerations

Seems too good to be true? There are always drawbacks when it comes to either of the two most popular life insurance policies. Here are some of the shortcomings for term life so there are no surprises for you or your family. 

• No Savings
• Underwriting

No Savings:

As discussed, there is a price to pay for not having to pay a very high price. If you outlive your policy (most do), then you haven’t built up any cash. It is sort of like renting where you never see that money again. But buying a place allows you to build equity over time.

Underwriting:

Term life insurance can be impacted by any health conditions you may have. Depending on the specific policy you apply for the insurance company may obtain your medical records and you may need to take a medical exam.

Best Term Life Companies

Now that we understand what term life insurance can do for us, it’s a great idea to understand some of the best companies out there. As mentioned, there are so many different policies available when it comes to term life. That’s why it is not a bad idea to look for a solid company first and then go over the options afterward. 

Haven Life Insurance Company

Haven life insurance has consistently been rated as one of the best term life insurance companies out there. This might be because they only specialize in term life so all their resources go to providing the best possible policies. 

You can expect:

• Minimum coverage amounts to $100,000 with many-year options between 10–30-year coverages.
• Some applicants may be exempt from needing to take medical examinations. 
• Fast and easy online application with quotes available at the end. 
• Partner of MassMutual who has been in business since 1851 with A++ ratings.

State Farm

State Farm is one of the leading insurance companies in the country so it’s no surprise that their term life policies are fantastic. The only downer is that State Farm is not always available in all the states so you need to see if you are in a qualifying area. 

You can expect:

• Minimum coverage amounts to $100,000 with many-year options between 10–30-year coverages.
• A return of premium option for 20- and 30-year policies where you will get 100 percent of your premiums back if you outlive the policy. 
• Option to pay more for a spousal rider who would receive extra benefits like living benefits, long-term care, disability benefits, and more. 
• Also, an A++ rating by AM Best and has been serving in insurance since 1922. 

New York Life

One of the oldest insurance companies in the game with some of the best ratings possible, New York Life offers great options for seniors. This company has been around since 1845 which means they know exactly what to offer. 

You can expect:

• They don’t offer online quotes so you must go in to see an agent if you want help. 
• Minimum of $100,000 in coverage for any of their four different term life insurance policies. 
• Offers four vastly different coverage options. These are non-renewable one year, renewable, family protection, and convertible term. 
• A vast array of rider options for additional fees. 

John Hancock

Based in Boston and founded in 18862 John Hancock has been around a while but puts a spin on things like offering discounts for those to save even more through their wellness incentives. They score well on AM’s Best with an A+ rating. 

You can expect:

• Minimum coverage amounts of $25,000 with many-year options between 10–30-year coverages.
• For those who are diagnosed with a terminal illness, there is a specific rider element that allows for accelerated death benefits. 
• Through their Vitality Program, you can decrease monthly premiums and save up to 15 percent by participating in healthy lifestyle choices like eating well and exercising. 
• Online or in-person agent quotes available. 

Term Life Rates for Seniors

So, what are the different rate options when going with a term life insurance plan? With each plan, the number of years along with a lot of other factors will determine the rate you pay. All term life insurance plans will have a max-age that they will distribute the plan. Let’s breakdown a few specific policies so we can better understand the rates. 

While technically a senior-citizen is considered to be 65 and up, we will breakdown term rates starting at 60-years-old finishing at 80-years-old. 

60-Years-Old

A 60-year-old term life insurance rate is going to be cheaper than one at 70 years. But the money can certainly change depending on whether you lock down a rate for 20 years or you try to go with a 10-year policy. Men always pay more because women tend to outlive men statistically. 

• The average cost per month for a 60-year-old male to cover up to $250,000 for a 10-year plan is around $76.12.

• The average cost per month for a 60-year-old female to cover up to $250,000 for a 10-year plan is around $56.86 per month. 

• The average cost per month for a 60-year-old male to cover up to $250,000 for a 20-year plan is around $141.36.

• The average cost per month for a 60-year-old female to cover up to $250,000 for a 20-year plan is around $101.34 per month. 

The cost increases give or take $100 per month every time you cover $250,000 more in term life insurance. These numbers are based on a non-smoking individual.

70-Years-Old

70-year-old seniors will also have the option to buy policies upwards of 20 years but will pay more when starting out with a new policy at 70. The same male and female rates apply. We notice here that the rates have more than tripled. 

• The average cost per month for a 70-year-old male to cover up to $250,000 for a 10-year plan is around $242.02.

• The average cost per month for a 70-year-old female to cover up to $250,000 for a 10-year plan is around $172.38 per month. 

• The average cost per month for a 70-year-old male to cover up to $250,000 for a 20-year plan is around $497.77.

• The average cost per month for a 70-year-old female to cover up to $250,000 for a 20-year plan is around $412.94 per month. 

The cost increases give or take $540 per month every time you cover $250,000 more in term life insurance. These numbers are based on a non-smoking individual. 

80-Years-Old

Starting a plan at 80-years-old can be astronomically high. Also, you will rarely ever see any term life insurance company offering out 30-year predetermined rates. The data is only available for 10 years at maximum. 

• The average cost per month for an 80-year-old male to cover up to $250,000 for a 10-year plan is around $927.86.

• The average cost per month for an 80-year-old female to cover up to $250,000 for a 10-year plan is around $722.74 per month. 

The amount of money increases give or take $800 per month every time you cover $250,000 more in term life insurance. These numbers are based on a non-smoking individual. 

Knowing Your Options

Now that you understand what term life insurance is and what companies get the best ratings you can go ahead and call. These numbers above reflect the average senior rates as a senior will pay a very different number than a young individual. Having said that, it is still cheaper in the end for a senior to go with term life insurance over whole life insurance. 

Whether it makes more sense for you to lock in a longer-term deal than a shorter one will depend on the sort of debts you owe and how much of it you want to be covered. This may be a mortgage or education expense you don’t want your child or beneficiary to inherit. 

In most cases with term life, you are not putting the money in anything. That means you only get the payout if you don’t outlive your policy. This is why it is relatively cheap compared to whole life insurance. However, few options worth looking at, offer your premiums back. 

Luckily, there are many options out there that will meet your needs.