The Best Life Insurance for Seniors
The best life insurance for seniors — for many, anyway — is a Guaranteed Universal Life (GUL) policy. This option provides affordable coverage that is designed to last for your entire life. We consulted life insurance experts on what factors make for an attractive GUL policy, then sought out companies offering a wide range of coverage amounts, terms up to 120 years of age, and riders allowing early access to funds in the event of illness. We located two exceptional providers, but to find the best option for you, we’d suggest comparing quotes.
New York Life
A financially robust institution that offers GUL policies plus valuable riders — like the option to continue receiving coverage even if you become disabled and can’t make your premiums, or to tap into your death benefit early should you need it for serious medical expenses. Coverage can go as low as $25k, and the company allows you to enroll without a medical exam.
Mutual of Omaha
A solid provider whose financial ratings came second only to New York Life, it too offers a range of universal policies that don’t require a medical exam, but its lowest benefit amount is $50K.
- December 19, 2017 — We’ve removed our former top pick, North American Company for Life and Health, for losing financial stability since we initially published our review in 2016. After re-evaluating GUL providers, we’re excited to recommend New York Life instead, which offers an impressive range of policy options, coupled with top-notch financial strength. We’ve also updated our review to discuss the pros and cons of Guaranteed Universal Life Insurance in more detail.
First things first: Shopping for life insurance is no different than any other type of insurance. To find the best policy at the best price for you, you’ll need to compare quotes from a bunch of different providers.
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But seniors also have a lot of different policy options to choose from, not just price. You can read our picks for term life insurance providers and whole life insurance providers to see if they are right for you. But after doing our research, we feel that the best life insurance for most seniors will be Guaranteed Universal Life.
Why We Picked GUL
If you’ve never heard of GUL policies before, you’re not alone. Term life insurance and whole life insurance are much more common. In fact, the American Council of Life Insurers estimates that whole life policies make up 64 percent of all life insurance policies purchased in the US. But “popular” doesn’t necessarily mean “better.”
“Most people are unaware that there are better value alternatives to traditional whole life, such as guaranteed universal life.”
Guaranteed Universal Life functions like a hybrid between term and whole, offering seniors the best of both: Like whole life, GUL provides permanent coverage that doesn’t expire after 15 or 20 years. But like term, monthly GUL premiums tend to be fairly affordable.
Here’s what else sets Guaranteed Universal Life apart:
- Unlike whole life, it won’t accrue much cash value during your lifetime. This limits your ability to borrow from it — a traditional draw for whole life policies. But the smaller cash value is what makes GUL so much cheaper than a traditional whole life policy. And if your main goal is to leave behind an inheritance, or settle funeral costs, this stipulation is unlikely to affect you.
- A GUL lets you select the age at which you want your policy to expire — whether 90, 95, 100, or 105. Your goal is for the policy to outlive you, so the higher the upper age limit, the better your odds (and the higher your premium). Most policies max out at age 121.
- Your annual GUL premiums won’t change, but you can choose the amount you pay each month. Maybe you’re paying down medical bills or preparing for a cruise over the summer. You can minimize your life insurance payments for those months and make it up during the following months. You’ll still need to pay the same annual amount, but you have more flexibility than, say, whole life, which requires you to pay the same amount at fixed intervals — or else forfeit your policy.
If you’re exploring your options, it’s worth noting that GUL is just one subtype of “universal life insurance.” Many insurance companies offer additional “universal life” products — but we’d suggest being wary of these options, since they typically lack fixed rates. They can seem cheaper, but run the risk of becoming more expensive over time: A market downturn or low interest rate climate (like today’s) could result in your premiums going up without warning, and you might find yourself suddenly unable to afford coverage.
"A guaranteed level premium is particularly valuable today, because the sustained period of low interest rates has made rate hikes more likely."
That’s not to say Guaranteed Universal Life is best for everyone. Different goals and financial situations may make term or whole life insurance more practical. If you’re under 70, and providing an inheritance is less important than making sure you don’t unexpectedly burden dependents with the rest of your mortgage, a ten-year term policy might be cheaper. And if you’re looking to life insurance as an investment that will accrue cash value — and you have no doubt you can keep up with the very hefty premiums — whole life might be best.
“Burial insurance” isn’t technically an insurance type. It’s just a term for any policy that’s meant only to cover funeral/burial costs. The most common form of burial insurance is “simplified issue” whole life. It’s meant to cover end-of-life costs and doesn’t require a medical exam. But since GUL policies can also be as low as $25,000, they’re small enough to function as an even cheaper alternative, since they offer the chance to prove your health via medical exam and lower your rates. According to Lenny Robbins, “If you’re in reasonable health, a GUL policy of $25,000–$50,000 can be a cost-effective alternative to traditional burial insurance.”
How We Found the Best Life Insurance for Seniors
Because we only wanted to recommend providers that were widely available, we sought out insurance companies that offered GUL in a minimum of 40 states, with no special eligibility requirements, pulling our candidates from A.M. Best’s Rating Services tool. Many of our favorite providers from other insurance reviews — including TIAA, Amica, and State Farm — didn’t offer GUL. But for the 26 companies that did, we evaluated the following criteria:
We didn’t factor in price. Life insurance is priced for everyone individually. The biggest factors are age and current health, but your heredity, driving record, and credit score also have an impact. There’s no shortcut for finding the best policy for the best price tailored to your specific insurance profile — you’re going to have to shop around no matter what.
Financial stability. An insurance company is only as good as its ability to pay out on a claim. Our top picks all have at least “Excellent” (A-) marks from A.M. Best, an independent agency that rates the financial health of insurance providers. Following the advice of the Insurance Information Agency, we also required our picks to have high ratings from at least one other agency — we looked for an “Excellent” (Aa1) from Moody’s or a “Very Strong” (AA-) Standard & Poor’s, the two other major ratings agencies. (All three organizations use slightly different ranking systems. You can see how they compare here.)
Death benefits as low as $50,000. Not everyone needs — or can afford — a high death benefit. If all you want is to cover your funeral or an outstanding loan, even $100K of coverage can be overkill. We only considered companies that offer GUL death benefits of $50K or less. (The lowest we found was $25K).
Issued through at least age 80. The Centers for Disease Control and Prevention pegs today’s average life expectancy at 81.2 years for women and 76.4 years for men. You may live well beyond that, but those numbers still affect your options for life insurance, because insurers charge more for people who are statistically closer to death — if they’ll insure them at all. Most companies who issue GUL will do so through age 85 as long as you submit to a physical exam. But we wanted to provide options for seniors who don’t choose to go through a medical exam — and in those cases, most companies will only issue GUL through age 80.
Guaranteed coverage through age 120. GUL functions like term insurance in that it technically expires at a certain point; it’s just that you’re not expected to get there. Insurers build the policy to extend through age 90, 95, all the way to 120. A policy that lasts to 95 will cost less than one that lasts to 120, but since we were looking for providers who put the “guarantee” in guaranteed universal life, we required coverage offered through age 120.
Accelerated death benefit for terminal illness. Typically present in the form of a rider (for which you have to qualify via medical exam), this provision allows you to access a portion of your death benefit early if you’re diagnosed with a terminal illness. It can help cover palliative treatments and other end-of-life care, granting a measure of comfort in a difficult hour. Pretty much all insurers offer this rider free of charge if you’re in decent health at the time of purchase, but they vary in the percentage they’ll allow you to access early.
Our Picks for Best Life Insurance for Seniors
Our Top Pick: New York Life
Four providers met our criteria and made it to the winner’s circle: New York Life, Mutual of Omaha, American National, and Legal & General America. But while all four aced the basics, New York Life pulled ahead in just about every area.
To start, it has the best financial stability, boasting the highest possible ranking from both A.M. Best (A++ – Superior) and Moody’s (Aaa – Exceptional). We appreciated this peace of mind, especially given that one of our former top picks, North American Company for Life and Health Insurance, didn’t even make our list of finalists during our 2017 update, thanks to a downgrade in financial stability.
New York Life also had the numbers that we wanted to see: Even 85-year-olds can get insurance — without a medical exam — and it will be good till they’re 120. (American National and Mutual of Omaha offer similarly generous terms, while Legal & General America requires a medical exam.) New York Life also offers coverage as low as $25,000, a low minimum that will help ensure affordable premiums if you’re on a budget.
If you’re in decent health, undergoing a medical exam is a good idea. Going through an exam is likely to help lower your premiums. But many seniors don’t want to deal with the hassle of an exam, and if you’ve had a recent setback, it could be the reason you’re denied coverage.
The one drawback? We weren’t enthusiastic about New York Life’s website, which looks nice but runs light on details. Quote tools, fact sheets, brochures are all unavailable — You’ll have to call an agent for specifics. But at the end of the day, we’d recommend doing this anyway. Talking to an agent is still the best way to get a personalized quote and make sure you’re choosing the policy options that make the most sense for you.
This is doubly true given the range of universal policy options that New York Life offers. You can customize plans by deciding on the cost and frequency of your premiums, plus select from a buffet of riders, including the one that matters most: Accelerated Death Benefit. If you are suffering from a terminal illness, this rider allows you to cash in on up to 90 percent of your death benefit early in order to cover bills and provide for end-of-life care. (Most companies max out at 75 percent.) New York GUL policies also offer a rider that usually only appears with whole life insurance — the ability to keep your coverage while forgiving your premiums should you become totally disabled.
We also liked that New York Life gives you the option to insure either one or two people. The first option typical for a GUL policy, with one insuror trading premiums for a death benefit on their passing. The second is known as survivorship life insurance. This policy type insures two people and pays out upon the second individual’s death. More affordable than paying two premiums for two policies, second-to-die life insurance is a good option if you intend your death benefit to settle a joint estate or serve as an inheritance.
Best for $50,000+ Coverage: Mutual of Omaha
If you’re looking to leave behind more than just funeral expenses, Mutual of Omaha is another great option. Its minimum coverage amount is double that of New York Life, at $50,000 rather than $25,000 — which means that premium prices are likely to start at a higher amount. But the company has exemplary financial strength, second only to New York Life. Like our top pick, Mutual of Omaha will issue GUL policies to seniors up to age 85, with coverage up to 121. No medical exam is required for policies with death benefits under $250,000.
Others to Consider
Seniors can secure $25 – $250k of coverage through American National without a medical exam, but if you’re looking for a higher death benefit than that, an exam is required. American National also stands out for allowing up to 100 percent of the death benefit to be “accelerated” in the case of a terminal illness (most max out at 75 percent, though some, like New York Life, allow for up to 90 percent).
Legal & General America
Financial ratings and maximum ages are all good, but the minimum coverage amount is $50k. Unlike our other picks, Legal & General America also requires a medical exam before you can take out a policy — a process that we look at in more depth below.
Did You Know?
Taking a medical exam can save you money.
We preferred companies that make GUL policies available without requiring an exam: For some seniors, it’s an inconvenience and maybe even a gamble — it might turn up health issues that raise your rates. But unless you have reason to believe that your health is worse than average, a medical exam is just about the only way to reduce your premium. And, according to insurance specialist Tony Steuer, opting for an exam generally make costs go down, not up.
Paid for by the insurance company, exams can be conducted at your home. They’re intended to capture a snapshot of your current health and determine your longevity — the longer the company thinks you’ll be around, the less they’ll charge. The exam results slot you into a health percentile. The bar for “standard” health is not that high, and every step up can save you sizable amounts.
In order to get the best possible readings, prepare by eating clean the week leading up to the exam, fast 8-12 hours before it begins, and flush your system by drinking lots of water. These measures won’t reverse any real health issues, but they could bring your blood pressure and urinalysis results into the clear. One health factor you won’t be able to improve in a week: Nicotine use. While nicotine has a half-life of 2 hours and reduces to practically untraceable amounts in the body after about ten days, that’s not the substance medical exams look for. They test for cotinine, a nicotine byproduct, whose 20-hour half-life hangs around substantially longer.
You can find policies that don’t ask for a medical exam at all, but be aware that those have extra, built-in costs. “Simplified issue” and “guaranteed issue” policies come with higher premiums, since the company is taking on more risk given less information about your health.
Beware of low-cost life insurance offers that sound too good to be true.
Maybe you’ve seen ads on TV for life insurance starting at $1 per month and thought, “What do I have to lose?” Unfortunately, it may be more than you think. Many AARP-sponsored whole life policies raise rates every five years, and others, which claim to never rise, will if you don’t pay your premiums on time. Providers won’t predict the future amount, but it’s based on your increased age. The increase amount will balloon the older you get, from $10 all the way up to $100. If you get an unsolicited policy brochure in the mail, or request information from TV, make sure you read the fine print carefully to see how much the policy will cost over your projected lifetime, not just the first few years.
If you’re under age 70, term might still be your best option.
If you haven’t retired yet and don’t necessarily need guaranteed coverage, term could be the most cost-efficient choice. There are a few extra factors to consider when buying term insurance as a senior, like the fact that term lengths longer than 15 years may not be available, depending on your age. And since all life insurance gets more expensive the older you get, if you’re older than 70, the cost of a more comprehensive GUL policy might be surprisingly close to term. In general though, the same rules apply for seniors buying term as for new parents: Look for highly rated, flexible coverage with level premiums, and shop around for the best price.
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