Types

There are generally two types of life insurance that are beneficial for elderly individuals to purchase. Universal life insurance offers an affordable method of purchasing a policy because it has flexible premium payments and many have guarantees which ensure that the policy will not lapse before the individual dies. Whole life insurance is the second type of insurance that is commonly sold to the elderly. It provides guaranteed cash values and death benefits to the individual. The cash values can be used for any purpose.

Significance

Both types of life insurance are permanent life insurance. The significance of this is that permanent life insurance remains in force for life. With term insurance, premiums are paid, but insurance coverage is temporary. If you are elderly, however, you probably have a permanent need for life insurance. Otherwise, you would be using your savings to cover your financial obligations instead of buying life insurance from an insurer.

Benefits

The benefit of buying permanent life insurance when you're elderly is that you don't have to use your savings to pay for your insurance needs. If you need coverage for estate taxes, you can use the insurance policy to pay those taxes instead of using your personal savings.

Disadvantages

The disadvantages to buying life insurance when you're elderly is that the policy costs more than when you were younger. The premiums may be five or 10 times more than if you had purchased life insurance in your 30s, for example. This means that you won't be able to buy as much. Insurers also limit the age at which you can purchase life insurance. In most cases, you won't be able to buy a policy after age 85.

Considerations

Buy life insurance when you're younger, if possible, so that your premiums are lower and you can purchase more. Alternatively, shop around for the lowest cost policy. For example, guaranteed life insurance does not mandate medical or health exams, but costs many times more than a fully underwritten life insurance policy.