When should I consider term life insurance if I'm a senior?

Life insurance decisions come down to two things - first, how much coverage, and secondly, what's the best type?  Both of these questions need to be answered regardless of how old we are.  However, as we get older, the answers to those two questions change dramatically.

Life insurance decisions come down to two things - first, how much coverage, and secondly, what's the best type?  Both of these questions need to be answered regardless of how old we are.  However, as we get older, the answers to those two questions change dramatically.

How much life insurance coverage?

When we're younger, we need a large amount of coverage to replace our income (to maintain our family's standard of living). Today however, the kids are on their own, our debts are getting minimized, and a lot of financial dependence has gone from our lives.  Instead, we have a variety of potentially new considerations for our life insurance requirements. These include:

• Final and Burial Expenses.
• Leaving money for our family and beneficiaries as a legacy.
• Clear up any remaining mortgages and debt.
• Replace any lost income/revenue upon our death, particularly drop in pension income.

To determine how much life insurance coverage you need, simply add up the amounts of each of these needs and you'll have a reasonable estimate for the amount of life insurance for most Canadian seniors.

Best type of life insurance for seniors

There's two general types of life insurance in Canada - term life insurance (for temporary life insurance needs, that have an end date), and permanent life insurance that has level premiums for life; permanent life insurance is for life insurance needs that 'always' happen no matter how old we are when we die.

Looking at the four considerations above, we see that mortgages and debt are needs that have an end date.  You should consider term life insurance (often at 10 year term) to cover the amounts of these debts.

For the other three - Final and burial expenses, money for family, and lost pension income - these needs are forever needs and therefore you should consider permanent life insurance to cover those amounts (often a whole life insurance policy).  

No Medical Exam Life Insurance

You may not need to pay higher premiums for a no medical exam life insurance policy - don't be afraid!  Contact our office and we'll give you a personalized consultation on the best type of medical exam policy for you (or recommend a no medical policy when appropriate).

Other considerations

If you have existing insurance, don't cancel it yet!  There may be important policy features that can get you life insurance coverage, without a medical exam!  This varies by policy type and life insurance company. Again, please contact our office for a personalized consultation.