Senior Life Insurance

Senior life insurance refers to life insurance designed for people whose age exceeds a certain threshold level. The specification of that level is arbitrary. Years ago, seniority was defined as having passed 65 years of age – the age at which most people retired. Today, the christening of senior citizens occurs at age 55 – or sometimes earlier. This is ironic, because life expectancy has increased markedly even as the beginning-age of seniority has decreased.

The point is not academic to the subject of life insurance. Annually renewable term insurance is a benchmark product in which premium rates increase annually to reflect the actuarial reality of higher mortality risk. The difference between the life insurance rates for 55-year-old and 65-year-old applicants is very substantial. Current convention points to 55 years as the crossover point, but allowance should be made for the sharp upward trajectory of risk and premium rates beyond this point.

The rationale for life insurance at any age is insurance need – the demand for a product that will transfer risk from individuals or households to a company specializing in risk-bearing.

The classic life insurance need stems from the desire to replace income that is lost due to the unpredicted death of a breadwinner. This replacement income pays daily expenses and tuition for children, monthly mortgage payments and living expenses for a surviving spouse.