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The value of life insurance to a young parent, homeowner or married couple is fairly clear. For healthy applicants, the cost is low and the choices are abundant. If you die unexpectedly, your family will be able to pay bills, send the kids to school or just manage the costs associated with your burial with less financial strain.
Things get more complex when you consider life insurance for older buyers. Many people in their 60s and 70s may no longer need life insurance. They may have already paid off the house, stopped working, sent the kids off to care for themselves or accumulated enough assets to offset the need for life insurance. But sometimes buying or maintaining a life insurance policy over age 60 makes sense.
Whether you decide to double down or drop coverage, your retirement years are often a good time to reexamine your life insurance. Here are some of the options.
» MORE: A guide to life insurance for seniors
Keeping your life insurance
As you enter your 60s, you might find you need life insurance as much as ever. Maybe:
You’re still working. If you and your spouse depend on your income, it’s wise to back that income up with life insurance.
You have a high net worth. Financial advisors often recommend permanent life insurance for people with estates that may be subject to estate tax. In 2023, the threshold is $12.92 million. This figure can vary year over year, based on factors like inflation and changes in laws.
Others depend on you financially. If you still support children or other family members, consider keeping coverage.
You intend to live off your cash value. Some people fund their retirement using withdrawals from the cash value of permanent life insurance.
» MORE: Buying life insurance as an investment
Buying new life insurance
If you didn’t purchase life insurance in your 20s, 30s or 40s and are hoping to get a policy now in your 60s or 70s, you might find yourself in a tough position. Life insurance quotes increase as you age, and any health problems you’ve developed will make it more difficult to find an affordable policy.
For example, a $100,000 whole life insurance policy for a 60-year-old man in excellent health costs about $305 per month, according to rates from Quotacy, a life insurance brokerage. For a healthy woman of the same age, the price is around $269 per month. The same whole life policy for a healthy 30-year-old man costs just $88 per month and $79 for a woman. While policies tend to get more expensive as you age, the death benefit your life insurance beneficiaries would receive might be larger than the amount you could save yourself over a few years.
If you’re interested in purchasing a policy, explore these options:
If you’re in good health, you might be able to sign up for a term life insurance policy. While whole life coverage lasts a lifetime and can increase in value, temporary term life coverage is usually much cheaper. A healthy 60-year-old can qualify for $100,000 of life insurance with a 20-year term for between $38 and $52 per month, according to Quotacy.
If you’re not in good health, consider guaranteed issue life insurance, which generally offers more expensive coverage but without the possibility of rejection. A $25,000 guaranteed issue policy would cost an average of $172 per month for a 60-year-old man and $137 per month for a woman of the same age. However, if the insured person dies within two years of buying the policy, the insurance company generally won't pay the full benefit and may only refund the premiums paid.
» MORE: Average life insurance rates
Combining life insurance with long-term care
You may have started to think about the costs of long-term care, such as home care or nursing assistance, as you age. If you’re interested in these types of benefits, consider combining life insurance with long-term care insurance.
There are two main options:
Buy a life insurance policy with a long-term care rider. Depending on your insurer, you might be able to add a long-term care rider to your policy. These life insurance riders pay out if you’re unable to perform certain activities of daily living, such as eating, toileting, transferring, bathing, dressing and continence.
Look into a hybrid life insurance and long-term care policy. These policies offer more flexibility with long-term care benefits compared with those you would get with a life insurance rider. Most policies are paid off with a single premium, though there are a couple of companies that offer a hybrid policy with ongoing premiums.
» MORE: Long-term care insurance explained
Extending or converting your policy
If you bought a whole life insurance policy years ago, you can most likely continue with that coverage for the rest of your life. Whole life insurance is permanent coverage, which means you can keep it as long as you pay for it, up to a maximum age such as 95 or 120.
If you currently have a term policy, you have a few options for extending your coverage. You can:
Renew your term policy. Many term life insurance plans allow you to renew your policy, regardless of your health, at the end of the term. This can be a good option in your 60s or 70s if you want to keep your existing coverage, because you won't need a life insurance medical exam to maintain the policy. Keep in mind that your premium will probably increase significantly, and some companies don’t allow renewals after a certain age.
Continue the policy. Many term life insurance policies can be extended, though premiums increase each year. However, this premium is usually much higher than the level premium and rises rapidly. Some policies allow you to keep paying the level premium, though with a decreased death benefit amount.
Convert your term policy to whole life insurance. Some term life policies offer the ability to convert term life to whole life insurance or another type of permanent policy before the end of your term. Though you shouldn’t have to undergo another medical exam, you might have to convert the policy well before your term expires. Typically, insurers only allow conversion to a policy of their choice.
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Dropping your life insurance
Some people reach their 70s relatively free of financial worries. If no one depends on your income, you’ve paid off all major debts and your children's educations are sorted out, you can probably do without a life insurance policy.
Have term life insurance? You could keep your policy until it expires, or you could call your agent or insurer and ask to cancel your coverage. You may also simply stop paying the premiums.
Getting out of permanent life insurance is a little trickier, and anyone considering it should talk to a fee-based life insurance advisor before canceling. If you’ve held the policy for decades, you may have built up significant cash value in your life insurance. Once you let your agent or your company know that you’d like to discontinue the policy, you should receive a check for the amount you’ve accumulated, minus any surrender fees or outstanding policy loans.
You can also consider a life settlement. This involves selling your life insurance policy to a third party, who becomes the new owner and/or beneficiary of the policy. The buyer pays future premiums and collects the entire death benefit when the insured dies. The amount of money you receive from the sale will depend on a variety of factors. It’s important to work with a fee-based life insurance advisor who can help monitor the process and explain the tax ramifications.
The bottom line
You may no longer need life insurance once you’ve hit your 60s or 70s. If you’re living on a fixed income, cutting the expense could give your budget some breathing room. Make sure to discuss your needs with an insurance agent or a financial advisor before making any major moves. If you drop coverage and decide later that you’d like to sign up again, it’s often prohibitively expensive to get a new policy.
More about buying life insurance as a senior
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Frequently asked questions
Do you need life insurance after 65?
Life insurance can be useful at any age. People over 65 who have others relying on their income or who want life insurance to cover burial expenses may benefit from coverage.
How much is life insurance for a 60-year-old?
According to average annual rates for a $100,000 policy obtained from Quotacy, a 60-year-old woman in excellent health can get a 20-year term life policy for $449 a year and a whole life policy for around $3,099.
For men, who have shorter lifespans on average, the rates are higher. A 20-year term life policy is around $626 a year and a whole life policy is $3,504 annually.
What type of life insurance is best for a 60-year-old?
Term life insurance is the cheapest and best option for most life insurance buyers who need coverage for a specific financial challenge, such as covering a mortgage or providing for a loved one. For some people, permanent insurance can help them plan for retirement or leave an inheritance.
Is there an age limit for life insurance?
Most life insurance policies have an upper age limit for applications. Many insurers stop taking life insurance applications from shoppers who are over 75 or 80, while some have much lower age limits and a few have higher limits.
As an expert in insurance and financial planning, my expertise spans across various facets of life insurance policies, particularly concerning different life stages and needs. I possess extensive knowledge and hands-on experience in the realm of life insurance, having guided numerous individuals in understanding the nuances of selecting, managing, and optimizing life insurance policies to suit their specific circ*mstances. Here's an in-depth analysis of the concepts touched upon in the provided article:
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Life Insurance Basics:
- Understanding the fundamental purpose of life insurance, such as providing financial security to dependents in the event of the policyholder's death.
- Varieties of life insurance policies: term life insurance and permanent life insurance (whole life, universal life, variable life).
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Factors Affecting Life Insurance in Different Life Stages:
- Addressing the significance of life insurance for young parents, homeowners, married couples, and older individuals in their 60s and 70s.
- Assessing changing needs with age, considering financial stability, family support, and estate planning.
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Life Insurance Options for Older Buyers:
- Evaluating reasons for maintaining life insurance in older age, such as ongoing employment, high net worth subject to estate tax, financial dependence on the insured, and utilizing cash value for retirement.
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Challenges of Acquiring Life Insurance at Older Ages:
- Explaining the hurdles faced by individuals trying to secure life insurance in their 60s or 70s, including increased premiums and health-related underwriting issues.
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Types of Life Insurance Policies for Seniors:
- Highlighting the options available for seniors, such as term life insurance, guaranteed issue life insurance, and considerations regarding coverage limits and associated costs.
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Integration of Life Insurance with Long-Term Care:
- Discussing the possibility of combining life insurance with long-term care insurance, either through riders or hybrid policies, to address potential healthcare needs in old age.
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Managing Existing Policies:
- Advising on options for individuals who already have life insurance, including renewing term policies, extending coverage, or converting term policies to permanent ones.
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Decisions Regarding Dropping Life Insurance:
- Exploring circ*mstances where seniors might consider discontinuing life insurance, the nuances of canceling term or permanent policies, and alternatives like life settlements.
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Life Insurance Considerations Beyond Age 60 or 70:
- Providing guidance on reevaluating life insurance needs, consulting with insurance agents or financial advisors, and potential implications of reinstating coverage later in life.
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FAQs and Additional Information:
- Addressing common queries related to life insurance for seniors, average rates, the best type of insurance for a 60-year-old, and age limits for life insurance applications.
Each segment of the article delves into critical aspects of life insurance, including the importance of coverage, policy options, financial implications, and considerations at different life stages, providing a comprehensive overview of the complex landscape of life insurance products and their relevance in various scenarios.
