3 Expensive Life Insurance Mistakes Seniors Must Avoid

Buying life insurance can be a good idea at any stage of life, even for older adults. If you still have children at home, have dependent adult children with special needs, or want to provide financial protection for grandchildren or other loved ones, buying life insurance is a valid move for seniors.

But watch out for some costly life insurance mistakes. Not every life insurance policy is the right fit for seniors' time horizons or budgets.

1. Buying the wrong life insurance policy for your goals

Before you buy life insurance, consider these questions:

• What financial goal is this life insurance supposed to help?
• Do you want to help pay for your loved ones' everyday expenses or pay off a mortgage in case you die?
• Do you want to help pay for grandchildren's college educations?
• Have you started a family later in life, or joined a blended family, and you have a younger spouse and young children or stepchildren to support?

Think carefully about how this life insurance policy fits into your overall personal finances and investment goals. If your top priority for buying life insurance is to get the maximum amount of financial protection in case you die prematurely, you should probably consider term life insurance. Term life tends to have the lowest-cost premiums and gives you the biggest amount of death benefit. And you can choose a shorter term life policy that covers the duration of the stage of your life when you have maximum need; for example, if your kids are 8 and 10 years old, you can buy a 10-year term life policy to cover your family until the kids are out of high school.

But if you want to combine your life insurance policy with investment options, other types of life insurance can build cash value while you're alive (along with paying benefits if you die). Some types of whole life insurance can be a good option, even for seniors. For example, universal life insurance can give you flexible ways to use your life insurance policy. You can invest the cash value for growth, borrow against the policy's value, and get flexible options for how to use the policy.

By choosing the right whole life insurance policy, life insurance can be a flexible financial asset. Universal life insurance and other whole life insurance policies are more complex and tend to be more expensive than term life. But they can be the right fit for some families.

2. Paying too much for premiums

Think carefully about how much you're prepared to spend on life insurance. Especially for seniors who might not be in perfect health, life insurance premiums might cost a lot more money than when you were younger. And some life insurance premium costs go up, year after year.

If you want the cheapest life insurance premium, getting term life insurance is probably the best choice. If you have more complex financial needs and a bigger budget, you might be willing to pay higher premiums for universal life insurance or other permanent life insurance policy. But don't assume that any life insurance for seniors is going to be "cheap." Instead, try to find the best value that suits your financial goals.

3. Getting the wrong amount of coverage

Don't overpay for the wrong amount of life insurance coverage. Think strategically about what you want this life insurance to accomplish: do you want to pay for final expenses? There are lower-cost life insurance policies that can help with that. Do you want to give your family a financial legacy by helping to pay off the mortgage or cover college costs? Choose a term life insurance policy with a big enough death benefit to help accomplish those goals.

Bottom line

Buying life insurance is not always an easy, inexpensive proposition for seniors. But the best life insurance companies will often have options for you to get life insurance, even if you have to get a medical exam or pay higher premiums. But before you start shopping for life insurance price quotes, think carefully about "why" you need life insurance and what you want that policy to accomplish. If you can qualify for a good policy, term life insurance often gives the most financial protection for your premium dollars.