A portrait of an older adult woman sitting in a senior care facility room.
You may be able to access your life insurance policy while you’re living to help pay for senior care expenses.

As you age, life insurance becomes an essential form of insurance to benefit your loved ones in the event of your passing. There are many types of life insurance, so you may wonder how much life and what kind of insurance you need. This depends on many factors, from your age to your family history. Here’s an overview of the types of life insurance available for older adults, including what affects your eligibility for life insurance.

What is life insurance?

Life insurance is an insurance policy that pays a policyholder’s beneficiaries a certain amount of money after the policyholder passes away. This insurance is covered by premiums the policyholder pays throughout their life while holding the policy. The terms of a life insurance policy are held between the insurer and the policy owner. These terms are dependent on certain factors, including age, medical history, and even family medical history. 

For example, you may not obtain the policy amount you might want if you have certain risk factors such as smoking or a heart condition; however, these factors are up to the insurer’s discretion. To keep your life insurance policy active, you must pay monthly premiums or a single upfront premium, depending on the type of life insurance policy you hold. 

What are the main types of life insurance?

There are various forms of life insurance available, depending on the policyholder’s needs.

Term life insurance

Term life insurance has a time limit on how long the policy will last. If you pass away within the term life insurance policy’s timeframe, your beneficiaries will receive the tax-free payout. Typical term limits are between 10 and 30 years. Once a term limit is over, the term life insurance policy will expire and need to be renewed to remain active. Term life insurance typically costs less than permanent life insurance, and premium payment amounts are consistent throughout the policy’s term. The subtypes of term life insurance include

  • Decreasing term life insurance: a renewable life insurance policy set to decrease at an agreed-upon rate.  
  • Convertible term life insurance: a policy with the option to convert to a permanent life insurance policy.
  • Renewable term life insurance: a renewable life insurance policy that does not require new underwriting, regardless of whether the policy holder’s health has declined. These policies usually have the most affordable upfront costs.

Permanent life insurance

Permanent life insurance does not expire and is valid for the entire term of the policyholder’s life. The only times a permanent life insurance policy becomes obsolete are when premium payments are not made or the policy is relinquished. 

Permanent life insurance has a more considerable upfront cost than term life insurance. The different types of permanent life insurance include

  • Whole life insurance: A form of permanent life insurance that accumulates a cash value over time. Policyholders can use this cash to pay off loans or contribute toward premium payments.
  • Universal Life (UL) insurance: A type of permanent life insurance that allows you to accumulate cash value with added interest. This form of life insurance offers varying premium amounts, and policyholders can adjust the death benefit.
  • Indexed Universal Life (IUL) insurance: A form of UL insurance that has the ability to earn interest on the cash value portion based on the stock market index. In other words, an IUL has the ability to earn a higher return. 

What affects the cost of life insurance?

  • Age: The older you are, the higher your life insurance premium may be. Therefore, the younger you obtain your policy, the more money you’ll save.
  • Gender: Women have a longer life expectancy than men, so some insurance carriers will provide women with lower premiums than men of the same age. 
  • Health: If your health is poor, this can contribute to how much you’ll pay in premiums each month. The health exam required by most insurers includes screenings for health risks that can predict life expectancies such as diabetes or heart disease. 
  • Lifestyle: Alongside the health exam, an insurer will evaluate your lifestyle, such as your activity levels and career choices. Those with a high-risk lifestyle may pay more for premiums.
  • Family medical history: Insurers will use this data to calculate whether you’re at risk for certain genetic diseases.
  • Smoking history: Those who smoke may be deemed high-risk to some insurers, driving up premiums.
  • Driving record: If your driving history includes violations like speeding or driving while intoxicated, your premiums will most likely be higher.

Did you know you can use your life insurance policy to pay for care? Learn more with ElderLife Financial to ensure you get the most out of your policy.