Life insurance questions seniors should be asking in today’s economy

Many Americans are reassessing their financial strategies as economic conditions shift now that we’re in mid-2025. While job markets remain stable and inflation has eased compared to recent highs, elevated interest rates and rising healthcare costs continue to pressure household budgets.

For those near or in retirement, this reassessment often includes the life insurance protections purchased years or even decades ago. Given how much has changed over the last few years, it’s worth evaluating whether these policies still fit your current circumstances. Below, industry professionals share what seniors should consider about their life insurance coverage today.

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Life insurance questions seniors should be asking in today’s economy

Asking these five questions can help you determine whether your life insurance coverage meets your needs and goals, experts say:

“Do I still need life insurance?”

Your life insurance needs have likely evolved since you first bought coverage. For example, many seniors bought term life insurance to replace income or pay off debts, such as mortgages and their children’s college costs. But as those obligations disappear and term policies end, new financial needs arise that may require coverage.

While you may not need to replace income anymore, death still creates significant costs for your family. 

“Funeral [costs alone] can [be] between $7,000 and $12,000,” notes Amanda Hamala, senior vice president and general manager of USAA Life Insurance. 

Beyond funeral expenses, life insurance can help with legal fees and other costs without forcing your family to sell assets quickly.

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“What kind of life insurance do I need?”

Before choosing a policy type, “[start] with a [clear] understanding of [your] needs and desires,” says Karen Malone, senior director of strategic planning for TransUnion’s life insurance business. What do you want the money to do beyond basic protection?

If you want affordable coverage for 10 to 30 years, term life insurance offers straightforward protection without cash value. “[But] it’s important to note this benefit is lost if [you outlive] the policy term, leaving nothing for [your] legacy,” Malone says.

Whole life insurance costs more, but it can work as both insurance and an investment. 

“[It] lasts a lifetime … and higher [interest] rates can improve the cash value and potential dividend payouts,” Malone says. “However, higher interest rates can also impact loans against these policies.”

“Does my current policy still match my estate plan?”

“Policies written years ago may no longer align with [your] estate plan,” Hamala says. “Lapsed or underperforming policies may require increased funding to remain in force.” She advises checking that your life insurance beneficiaries match your current wishes and that any trust structures work with your policy.

Consider reviewing your policy every year or after major life events (e.g., remarriage or new grandchildren). If your policy no longer fits your estate needs, explore your options before canceling. Many policies allow you to convert to different coverage, reduce benefits or change to paid-up status. These alternatives may better serve your goals while preserving the value you’ve built.

“Will my life insurance proceeds create problems for my beneficiaries?”

Nathan Hobson, national sales director and financial advisor at Mutual of Omaha, suggests thinking carefully about who you name as beneficiaries and what challenges they could face. A beneficiary with special needs, for instance, may lose crucial government assistance if they receive a large payout. Others might face tax issues or circumstances that make a direct inheritance challenging.

If you’re concerned about these potential issues, Hobson recommends naming a trust as your beneficiary rather than individuals. It may also help to consult an estate planning attorney to ensure your policy ownership and beneficiary choices work with your estate plan.

“Can life insurance help me make charitable gifts or support my family?”

“Seniors [often] look to legacy planning for supporting extended family members … or making charitable gifts,” says Hamala. “Life insurance [offers] a tax-efficient way to do this.”

You can name a charity as a full or partial beneficiary, or use policies to fund college savings plans or support religious institutions. Second-to-die policies pay out after both spouses pass away.

Before moving forward, though, “confirm gift tax implications if [you’re] transferring ownership during life,” Hamala says. And “consider family dynamics before [deciding] on any significant financial gift.”

The bottom line

Asking the right questions is the first step to securing cost-effective, valuable life insurance. The next move experts recommend is gathering quotes from several insurers. Also, know your goals, whether that’s final expenses, family protection or legacy planning. Hobson and Malone recommend working with a licensed professional to find the right coverage for your situation.