There are many types of life insurance policies available for seniors looking to provide their families with a sense of financial security after their death. Different types of policies can provide different benefits and payouts, based on how they are structured.

Understanding these options can help you choose the coverage that best fits your age, health, and financial goals. We’ll explore a few of the common options and what they may cover.

Term life insurance

Term life insurance offers coverage for a set period of time. If the insured person passes within the covered period, the death benefit is paid out. A death benefit is a sum of money that is paid out from your insurance policy when the account holder passes away.

With that limitation of time, term life insurance often has lower premiums compared to whole life insurance, making it often a more affordable life insurance option for seniors.

Term life insurance policies are typically recommended for younger, healthier seniors who still have large financial expenses, like a mortgage. They come in varying level terms (period of coverage), according to the Insurance Information Institute (III), such as:

Yearly/annual renewable term
5-year renewable term
10-year term
15-year term
20-year term

Some term life insurance policies are convertible – meaning that the policy owner may be able to change it into a permanent type of life insurance at a certain point without having to go through a new health screening, explains the III.

Whole life insurance

Whole life insurance is intended to be a permanent life insurance policy. As long as it is maintained, it will last until death and there is no requalification process.

With this insurance type, your payment goes to insuring you, the policy fees, and building cash value in your policy with tax-deferred status. These policy types operate as a savings account. Some policies may even pay dividends which can be used to help pay the premium or used by the policy owner.

With this policy type, your premiums, cash value growth, and death benefit are locked in, meaning they will not change.

Whole life insurance can be a great insurance option for seniors. Many whole life insurance plans have higher maximum age restrictions, providing those who are older with coverage options. In addition, the fixed premium can help with financial planning in a fixed-income situation.

But, one thing to consider is that premiums for whole life insurance tend to be higher than for term life insurance, and if a payment is missed, the plan may lapse.

Universal life insurance

Universal life insurance is a more flexible permanent life insurance option. Like with a whole life insurance policy, policies will have a premium, cash value growth, and death benefit. But those values are fixed in a whole life insurance policy, whereas universal life insurance is designed to be more flexible.

With universal life insurance, you can adjust your premium payments, making it often less expensive than whole life insurance if you so choose. But if you choose to make smaller payments, that could impact the growth of your cash value and the amount of the death benefit.

This option can be appealing to people who may not have total certainty that they will be able to pay the premium on a whole life insurance policy or want the flexibility of paying a variable amount.