Should You Buy Life Insurance in Your 60s?

Considering life insurance in your 60s? The decision is a personal one, heavily influenced by individual circumstances. While there are compelling reasons to invest in a policy, it's not a clear-cut choice for everyone. This article aims to shed light on key factors to help you make an informed decision about life insurance at this stage of life

Life insurance in your 60s can serve several purposes:

• Dependents: If there are people still relying on your income, such as a younger spouse or dependent children, life insurance ensures their financial protection.
• Funeral Expenses: Life insurance can provide the funds to cover burial costs and final medical bills, preventing these expenses from burdening your family.
• Legacy or Gift: If you want to leave a financial legacy or gift to your children, grandchildren, or a charitable organization, a life insurance policy can facilitate this.
• Estate Planning: Life insurance can be used to cover estate taxes, avoiding the need to liquidate other assets.
• Business Planning: For those who own a business, life insurance is crucial for business succession planning, covering business loans, or funding a buy-sell agreement.
• Debts: Life insurance can be used to pay off remaining debts, such as a mortgage, auto loans, and credit card debt so they don't fall on your loved ones.

On the other hand, several factors may indicate you don't require life insurance in your 60s:

• Financial Independence of Children: If your children are self-sufficient and your spouse has sufficient resources, life insurance may not be necessary.
• Sufficient Retirement Savings: If you've accumulated sufficient savings or assets to cover your spouse's living expenses, final expenses, and any legacies you wish to leave, life insurance might not be needed.
• Limited Debt: If you're debt-free, the need for life insurance significantly reduces.
• Existing Coverage: If you have existing life insurance coverage that meets all your needs, buying additional coverage may not be cost-effective.
• Post-retirement Income Streams: If you have post-retirement income streams, like pension or annuity, they may provide enough financial security without the need for life insurance.

Life insurance premiums increase with age and are influenced by health status and lifestyle choices. For a healthy, non-smoking 60-year-old, a 10-year term life policy of $250,000 could cost approximately $100-$150 per month. A similar whole life policy could cost $200-$300 per month or more. For smokers or individuals with health issues, these costs can be significantly higher.

The types of policies generally available for individuals in their 60s include:

• Term Life Insurance: Provides coverage for a specific term (e.g., 10, 20 years). If you pass away within the term, the death benefit is paid to your beneficiaries. See the best term life policies.
• Whole Life Insurance: Offers coverage for a lifetime and has a cash value component that grows over time. See the best whole life policies.
• Guaranteed Acceptance Life Insurance: This is a type of whole life insurance that doesn't require a medical exam and has guaranteed approval, but comes with higher premiums.
• Final Expense Insurance: Specifically designed to cover funeral costs and other final expenses. This type of insurance typically has easier approval and lower coverage amounts.

For more information see our ranking of the best life insurance for seniors or guide to the best life insurance for those over 60.

The amount of life insurance coverage someone in their 60s needs will vary greatly depending on individual circumstances. Here are a few factors to consider:

1. Outstanding debts: If you have any outstanding debts, such as a mortgage or personal loans, your life insurance should ideally cover these to prevent burdening your loved ones.
2. Income Replacement: If you're still working, consider your income and how many years you plan to continue working. Your life insurance coverage should ideally replace your income for those years, especially if your spouse or dependents rely on it.
3. Final Expenses: The average cost of a funeral and other final expenses can range between $7,000-$12,000. You may want a policy that covers these costs to avoid burdening your loved ones.
4. Estate Taxes: If your estate is large enough to incur estate taxes, life insurance can be used to cover these costs.
5. Legacy/Inheritance Goals: If you want to leave a financial gift to your children, grandchildren, or a charitable cause, calculate this into your coverage amount.

Many life insurance companies do allow you to extend your term life insurance policy at the end of the term. This is usually done through a feature called "term conversion." This allows policyholders to convert their term life policy to a permanent policy (like whole life or universal life) without having to go through the underwriting process again.

It's important to note, however, that this feature may not be available with all term policies, or it may only be available for a specific period within the term. Additionally, while you won't have to go through medical underwriting again, the premiums for the new permanent policy will be based on your age at the time of conversion, which means they will be significantly higher than your term life premiums.

Most insurance companies have age cut-offs for term policies. Typically, a 20-year term policy may not be available to individuals over 65, although this varies among insurers. Some companies, including Protective, Prudential, and Lincoln Financial, will issue a 20-year term policy to individuals in their early 60s, especially if they are in good health.

In conclusion, the decision to buy life insurance in your 60s is a personal one, reliant on your unique circumstances and financial objectives. Carefully evaluate the potential benefits and costs, and consider professional advice to make an informed choice. While life insurance can serve as a useful financial planning tool, it's crucial to use it appropriately for your specific needs.