5 Types of Insurance Seniors Need
Written by TYE Medical on Mar 16th 2023
Much of life is unexpected and even unpredictable, which is why it’s often wise to take steps to protect ourselves and loved ones. That’s the entire premise of insurance. You buy it hoping you don’t need it but are glad you have it if you do.
But today there is insurance for everything, including lottery insurance and alien abduction insurance. (And no, that’s not a joke.) How do you know what type of insurance you actually need, and what is recommended for seniors?
As we age, we should consider several different types of insurance, some of which are best purchased in your younger years. But others are important to buy as you approach later life. So here is what you need to know about commonly recommended insurance for seniors and when you might need them most.
1. Medigap Insurance or Medicare Advantage
Unless you’ve had to deal with Medicare before, you might not realize that these benefits often leave you with out-of-pocket costs. Depending on your health care needs, this liability can be burdensome as it is about 20% of approved expenses after deductibles are paid.
Many people opt for either Medigap Insurance or Medicare Advantage plans to reduce the burden of these additional costs. Which one you choose is a matter of personal needs and preference. But both types of coverage are sold through private insurers approved by Medicare.
Medigap Insurance
Medigap helps cover the copays and extra services not included with Medicare. It’s often more customizable and flexible with healthcare providers and hospital networks. But because of this customization and flexibility, monthly premiums can be higher, and you’re paying an additional premium above the cost of a Medicare plan.
But Medigap requires you to have both Medicare Parts A and B if you want to get and keep it. You can choose from 10 different Medigap insurance plans that are approved and standardized by the federal government.
In addition to Medicare A and B coinsurance and copays, some Medigap plans include very limited coverage for skilled nursing facility care and foreign travel emergency health coverage.
But knowing what Medigap doesn’t cover might better help you make the decision about what’s best for you. Medigap doesn’t cover:
- Prescriptions
- Vision or dental care
- Eyeglasses
- Hearing aids
- Long-term care
- Private-duty nursing
Even though it doesn't cover prescriptions, you can purchase a Medicare Part D prescription drug plan separately. You would have to weigh the benefits and the cost to determine if Medigap or Medicare Advantage is best for your needs and your budget.
Medicare Advantage
You can consider this a packaged deal that is also referred to as MA or Part C. It includes Original Medicare Parts A and B but also has additional benefits that Original Medicare doesn’t provide, such as the prescription benefit of Part D. Many Advantage plans include prescription coverage but be sure to verify this as some don’t.
Because it’s like a “bundle” of coverage, you can save money with an Advantage plan, but it depends on what coverages you opt for. If you don’t want a lot of extras or if prescription drug coverage isn’t important to you, then you might save money with a Medigap plan. It’s best to weigh your options based on your specific plan needs.
Opt for a Medicare Advantage plan if you want additional coverages for:
- Vision
- Hearing
- Dental
- Gym discounts
- Prescriptions
- Emergency and urgent care
- Medical transportation
- Adult day care
Not all plans include these coverages. It’s a good idea to pinpoint which coverages you need the most and look for a plan that provides them.
But the tradeoff is that Advantage doesn’t cover copayments and coinsurance like Medigap does. And you will also have your deductibles to pay. However, the federal government requires Advantage carriers to set an out-of-pocket maximum for your protection.
2. Life Insurance
This is a type of insurance seniors need because it protects your loved ones after you’re gone. Ever wonder who has to pay your mortgage? Your car payment? Your credit cards? Oftentimes, this falls to your spouse or children after your passing. An appropriately sized life insurance payout can help your family payoff all your debits and hopefully have some left over.
The tricky part is that you must be in good health to get a fair deal on life insurance. It’s also cheaper when you’re younger. Most seniors have had a policy in place for years, but you’ll want to ensure that the premiums are up-to-date and all your paperwork is organized and easy to find when needed.
Whether you need to buy life insurance or want to understand what you already have, it’s good to know about the two most common options: term or whole life.
Term Life Insurance
- Covers you for fixed period, often 10, 20, or 30 years
- Lower premiums
- Only value is the death benefit
- Can convert some plans to whole life
- Possibly renewable at the end of the term
Term life insurance is often purchased as additional life insurance coverage during critical years when children are young or in college. Those are times your family is most likely to need the extra money if you were to die unexpectedly.
Whole Life Insurance
- Covers you for your entire (whole) life
- Premiums are fixed
- Some policies pay dividends
- Builds cash value (tax deferred)
- Can borrow against the cash value of policy
Since many seniors are living longer, it’s important to verify the “age expiration” of your whole life policy. Some policies only pay out to age 95 or 100.
3. Long-Term Care Insurance
According to the Administration for Community Living, seniors turning 65 now have a 70% chance of needing long-term care services at some point in their lives. The problem is that these services come with a price tag that most people can’t afford. The 2021 median costs breakdown like this:
- $54,000–assisted living facility annual cost
- $108,405–private room in a nursing home
Long-term care is necessary if you require daily living assistance or professional medical care for a chronic illness, including memory loss. Assisted living facilities and nursing homes are the most common types.
Since most people can’t pay out of pocket for long-term care, insurance for this purpose is the best way to meet the need. You can buy long-term care insurance through private insurance carriers. Major carriers like The Hartford and Mutual of Omaha offer this coverage.
And you can’t count on your private health insurance to cover the costs of long-term care. Medicare, Medigap, Medicare Advantage, and even Medicaid won’t cover long-term care.
So, when should you buy? This is one of the few types of insurance that’s safe to buy later in life, but you want to do it while still in good health. The optimal time for many seniors is age 60-65 (couples at age 55) and before any major health complications arise. This will ensure you have something in place for the future or when the unforeseen happens.
If you purchase sooner, the premium is less but you are paying that premium for a much longer time.
4. Burial (Final Expense) Insurance
This is a type of insurance seniors need only if they don’t have or can’t afford a typical life insurance policy. Consider it “life insurance lite”. If you simply want to relieve some of the burden from your family members by helping to pay funeral costs, then burial insurance or final expense insurance is a good option.
In 2021, the median cost of a funeral, viewing, and burial was $7,848. The median cost of viewing and cremation was $6,971. That’s not pocket change and would bring financial strain to many families.
Social security does provide a death benefit, but it’s tiny in comparison to the cost of an average funeral. It’s not something your family will be able to rely on for help when they need it.
5. Vision Insurance
You might be surprised to see this listed as a type of insurance seniors need. But many of the eye diseases develop after age 60 can permanently affect your vision. Early detection is key to preventing vision loss.
If you’re like most seniors on a tight budget or fixed income, you’re less likely to get routine vision exams without insurance. Additionally, several other medical conditions can be detected through eye exams and retina scans. If you have diabetes, your doctor may request you receive annual retina scans.
You can purchase a vision policy that is customized for your needs and budget. Some plans are more affordable and designed to supplement your Medicare coverage. But if your vision needs are greater, you can opt for premium coverage that takes care of all you require. Be sure you get upfront information about enrollment fees, waiting periods, copays, deductibles, and in-network providers.
Take Inventory of Your Insurance Policies and Needs
You’ve probably accumulated insurance policies over the years, and it’s even possible you have one you don’t even remember. It can be worthwhile to look through your files and bills to locate each of your policies.
Do you see any gaps? Does your life insurance policy cover funeral expenses, your debts, and allow additional resources for your family? Do you need to purchase burial insurance if your life insurance policy has lapsed or your term-life policy has expired?
Talk to your family about the possibility of needing long-term care and consider your options for long-term care insurance.
For information about Medicare and coverage for incontinence supplies, check out our resource guide, Your Guide to Insurance Coverage for Incontinence Supplies.
