Life Insurance After 60: What You Need to Know

As you approach your 60s, you might find yourself re-evaluating your life insurance needs. With children grown and possibly less dependent on your income, you may wonder if maintaining a life insurance policy is still necessary. However, there are several factors to consider before making a decision. In this blog, we will explore the various aspects of life insurance for those over 60, helping you make an informed choice.

Do You Need Life Insurance After 60?

Whether or not you need life insurance after 60 largely depends on your financial responsibilities and resources. While some may find it unnecessary, life insurance can still be beneficial at any age. According to Annuity.org, more than half (57%) of Americans aged 65 and up have life insurance. Here are some reasons why you might want to keep your life insurance policy:

Supporting Survivors

Even if your children are grown, you may still have dependents such as a spouse, children living at home, or elderly parents who require care. Additionally, you might want to consider future expenses for your dependents, such as weddings or college tuition.

Paying Your Debts

If you have outstanding debts like a mortgage, car loan, student loan, or credit card bills, life insurance can help ease the financial burden on your heirs. Life insurance payouts go directly to your beneficiaries, rather than being used to pay off debts, ensuring your loved ones receive the full benefit.

Replacing Income

If you are still working, life insurance can replace your income and any job-related benefits that end with your death. Employer-provided health insurance or 401(k) matching contributions can be worth $2,000 per month or more, according to the Insurance Information Institute. Life insurance can help bridge the gap if your spouse’s income is reduced due to the loss of your benefits.

Covering End-of-Life Expenses

Funeral costs can easily exceed $10,000, and there may be additional bills from nursing homes and medical treatment. On average, medical care in the last year of life costs $80,000, according to The Lancet. Depending on state laws and other factors, your estate or family may be responsible for these expenses. Life insurance can help cover these costs.

Building an Estate

If you have significant assets, permanent life insurance can be part of your estate plan, helping you build cash value and leave tax-free money to your heirs.

Paying for Potential Health Issues

Long-term care insurance pays for in-home or nursing care if you can’t manage daily activities. Some life insurance policies include long-term care or offer it as a rider. There are also riders that let you tap into your death benefit in case of a serious or terminal illness, or disability riders that pay your premiums if you become disabled and can’t work.

How Much Life Insurance Do You Need After 60?

When determining how much life insurance you need, consider the following factors:

• Your expenses
• Your outstanding debts
• Your current financial obligations and monthly household expenses
• Your family’s future financial needs
• Your current income and the value of your employee benefits
• Your liquid after-tax assets, including retirement plans, savings, pensions, other life insurance policies, and Social Security benefits

Subtracting your assets from your expenses will give you an idea of how much life insurance you need.

Options for Life Insurance in Your 60s

If you decide you don’t need life insurance, you can cancel your policy or let the term run out. Otherwise, you have several options:

Keep Your Current Coverage

If your existing insurance policy is affordable, you may choose to keep it in force. You can also adjust your coverage to better suit your current needs.

Renew an Existing Policy

Some term life insurance policies are renewable, meaning you can keep your coverage without a medical exam. Renewals are generally done in one-year increments, with premiums increasing annually.

Convert an Existing Policy

If you have group term life insurance at work and are retiring, check if this coverage ends with your employment or if you can keep it or convert it to an individual policy.

Purchase a New Policy

Buying new term life insurance means premiums stay the same throughout the term. For those over 60, shorter terms, such as five or ten years, may be sufficient.

Get No-Exam Life Insurance

Getting life insurance typically requires a medical exam. Depending on your health, you might not qualify or might pay higher rates. However, you can also buy no-exam life insurance, which comes in two formats:

• Simplified Issue Life Insurance: The insurer asks questions about your health history and family history and reviews your medical records to see if you qualify. Maximum coverage generally ranges from $25,000 to $300,000.
• Guaranteed Issue Life Insurance: You’re guaranteed coverage, but you’ll still have to answer some questions about your health. This type of coverage is pricey and has significant limitations: Coverage maxes out at $25,000, and if you die within two or three years, your beneficiaries receive only the premiums you’ve paid plus interest.

Cost of Life Insurance Over 60

Life insurance costs are determined based on several factors:

Your Age

Insurance premiums rise with age. For example, a 35-year-old man can expect to pay $20.90 per month for $500,000 worth of coverage, while a 65-year-old man would pay $256.92, according to data from Policygenius.

Your Gender

Women generally live longer than men, so their life insurance premiums are typically lower.

Your Health

Preexisting medical conditions, such as diabetes, high blood pressure, or a history of cancer, can mean getting less coverage and paying more for it. In some cases, you may be denied coverage altogether. Insurers can’t deny coverage based on a disability, but they can charge more if your disability is likely to cause health complications or reduce your lifespan. Your family medical history might also mean higher premiums.

Your Coverage

Buying $1 million worth of life insurance costs more than purchasing $25,000 worth. Keep your premiums low by purchasing only the coverage you need.

Type of Policy

Term life insurance is the most affordable type of coverage; renewable and no-exam term policies cost more than standard policies. Permanent life insurance is more expensive than term life insurance; within the permanent life category, whole life insurance costs more than universal life. Insurance riders will also add to your costs.

Your Credit Score

In some states, insurance carriers check your credit-based insurance score when setting premiums. Good credit could net you a lower premium. Credit-based insurance scores use similar data as regular credit scores. Check your credit report and credit score before applying for life insurance and take steps to improve your credit if needed.

Term vs. Whole Life Insurance in Your 60s

You can choose from two primary kinds of life insurance: term and permanent.

Term Life Insurance

Term life insurance lasts for a specific term, typically 10 to 30 years; premiums remain the same throughout. Your beneficiaries receive a death benefit if you die with the policy in force. When the term ends, you can purchase a new policy or may be able to renew the policy or convert it to permanent life insurance.

Permanent Life Insurance

Permanent life insurance lasts your whole life or up to 99 years. As with term life insurance, premiums generally remain the same throughout your life. Unlike term life insurance, permanent life insurance builds cash value that earns interest. As the cash value increases, you can withdraw the cash, borrow against it, add it to the death benefit, or use it to pay premiums. However, if you don’t use the cash value before your death, it reverts to the insurance carrier.

Term life insurance is simpler and more affordable than permanent life insurance, which costs up to 15 times as much. However, permanent life insurance may work for high-net-worth individuals who’ve maxed out their other tax-advantaged investment options.

The Bottom Line

Life insurance can provide security at any age, but whether you need it after 60 depends on your situation. Assess your financial obligations, your resources, and your family’s needs to determine if life insurance is necessary. While you’re at it, set up free credit monitoring with Experian. You’ll get alerts to important changes in your credit that can affect your family’s finances, providing even more peace of mind.

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