Senior citizens should weigh their choices carefully before deciding to buy life insurance policies.

Life insurance primarily is used to replace lost income. The choice of whether to buy a policy is more clear-cut for young adults, who often have children or spouses relying on them for support. As you grow older, however, life insurance quotes can become so expensive that the costs outweigh the benefits.

Insurance is a business and carriers want to be sure they can turn a profit when a policy is issued. Because seniors are more likely to die, they represent a higher risk than younger consumers. Seniors who choose to keep life insurance policies when no one depends on their income often do so to create a legacy for children, grandchildren or charitable organizations.

Looking for good rates

If you shop around, you are likely to get the best life insurance rates. However, if you are trying to preserve your wealth for your children or other heirs, long-term care insurance--which provides for you when you no longer can care for yourself--may be a better choice.

That's because the costs of living in a nursing home can strip away your savings in your final years. Long-term care insurance, like life insurance, gets more costly as you age, however. Your health at the time you make your purchase also will affect the size of your premiums.

There are many choices

If you purchase a life policy, you'll be asked to choose between two options:

  • Term life insurance, which protects you for a set period.
  • Permanent life, which remains in effect as long as you keep up your premiums, no matter how long you live.

Term policies generally are less expensive, but many insurers will not issue them to elderly consumers. Some companies stop issuing policies to you when you reach age 75. A few carriers may issue a policy to you at age 80. Each company has its own guidelines.

Permanent life policies typically are easier for seniors to buy, but they also are more costly because they build cash value over time. For a detailed explanation of such life insurance products, read "Permanent life insurance basics: an overview of cash-value policies."

Paying for your funeral

If you are on a tight budget, you may decide that you only need a small life policy to take care of burial and funeral costs. Such products may be called burial, funeral expense or preneed policies.