Senior Life Insurance Is Generally A Poor Value

The insurance industry, unfortunately, is fertile hunting ground for con-artists to profit unethically from naive consumers.  Senior life insurance is one such area of possible (if not likely) abuse.  Am I saying senior life insurance has no valid uses?  Not at all, but  its uses are  limited.

Why Senior Life Insurance Is Generally A Bad Idea

Life insurance exists for one primary purpose:  to replace a working person’s income for their dependents (spouse, children, etc) in the unfortunate event of their death.  If you have depends who rely on your income to survive, you absolutely need life insurance.  It’s generally a waste of money, on the other hand, if nobody depends on your income for their livelihood.

Hence the reason senior life insurance rarely makes sense:  most senior citizens don’t have any dependents.  Their children are generally grown up and they’ve (hopefully) accumulated an adequate nest egg to live on.  One could make the argument that the surviving spouse could benefit from a life insurance payout, but that argument doesn’t hold water because a.) if you have enough money to afford steep senior life insurance premiums you probably don’t need the payout to begin with and b.) you can’t always guess which spouse will die first.  Since insurance premiums are set based on life expectancy, senior policies are especially costly and it would be prohibitively expensive to insure  both parties.

Valid Uses Of Senior Life Insurance

Senior life insurance isn’t completely useless.  Here are some situations where it makes sense.

• To Avoid Estate Taxes – Since life insurance proceeds don’t go directly to beneficiaries and aren’t subject to probate, they don’t count against your estate tax exemption.  If you have a large estate and insist on leaving a large sum of money to a child, grandchild, or charity, senior life insurance might make sense.
• To Provide For A Minor Grandchild Dependent – Is is a sad reality that sometimes life happens and grandparents are forced to care for their minor grandchildren.  If you find yourself in this unfortunate situation, you absolutely must purchase life insurance coverage to protect your grandchildren should something happen to you.
• To Provide For Final Expenses – Funerals expensive, and many people buy senior life insurance in order to help heirs pay their final expenses.  I actually strongly disagree with this:  you would probably come out ahead simply saving the money in a special account the money you would otherwise use to pay your insurance premiums.  That said, senior life insurance is sometimes under-priced by the market and represents a good deal.  Be sure to do the math before signing on the dotted line.