There are many things in life that get better with age. Unfortunately, life insurance premiums are not one of them – and if you wait until age 60 to begin looking for a policy, you’ll learn this very quickly.
That’s not to say that getting an affordable life insurance policy at 60 years-old is impossible. However, you will be a bit more limited in your options, and you can expect the price for coverage to jump up from that of your younger counterparts.
Let’s take a look at why you need coverage after 60 and what you can expect once you begin shopping around.
Life Changes Around Age 60
There are many life stages that we all go through, which can include our careers and our families. All of these should be taken into account when planning whether or not to buy a life insurance policy at any age.
For instance, if you are looking at life insurance at age 60, you are unlikely to have small children at home who would be impacted by your absence. With the average age of first-time parents being about 26 in the U.S., we can reasonably assume that by 60, your children are all grown and (somewhat) independent. While this isn’t the case for everyone, it’s likely true for the vast majority of those in this age bracket.
This means that you don’t need to necessarily worry about buying life insurance coverage to provide for things like child care, health care, or education expenses for your kids – all big factors when determining how much life insurance you need. You may still want to buy coverage that will pay off their student loans, provide a down payment on their home, pay for their wedding, or simply bolster their finances a bit. However, by age 60, this is more likely a preference for your adult offspring than an absolute necessity for minor children.
There’s also the issue of replacing your income.
In the United States, the average worker retires around age 63. This means that they will begin living off of their established assets, such as retirement accounts, and start enjoying life. Somewhere between ages 62 and 65, most of them will also begin taking Social Security Benefits, which they have earned over their decades in the workforce.
Once you’ve reached retirement age and quit working, you likely no longer have a working income. Instead, you will live off of government benefits and retirement account withdrawals, which you have likely spent many years planning and building. Even if you were to pass away, these assets would remain and could be passed down to your children or other loved ones.
On the contrary, if you were still in the workforce and passed away, your loved ones would suddenly be left without your paycheck, which is a leading reason for buying life insurance coverage. So, why bother with life insurance if you’re already at a retirement age?
Why to Buy Coverage at 60
There are many reasons you may want to buy life insurance coverage after 60. Whether it’s still necessary at this point or simply a preference, this is one financial product that can make sense at any age.
If you have anyone who relies on your income, especially if you don’t have sufficient retirement funds or haven’t yet reached a secure retirement age, life insurance is a smart move. For example, if you still work and your spouse would be in a bind without your income, you should consider coverage. The same is true if you have minor children, a child or dependent with needs who will always rely on your support, or other loved ones who you help financially.
If anyone is relying on your income, and your assets to-date (such as retirement accounts) wouldn’t suffice, life insurance is wise.
Even if your children are grown and financially independent, you may want to still provide for their needs. Buying a life insurance policy can do this. As mentioned above, you can use a policy to provide for certain expenses like a wedding, college student loans, or set them up with a future down payment on their home.
Lastly, if you still have a mortgage on your home, owe personal loan or credit card debts, or don’t have sufficient savings to cover your final expenses, you should at least consider a life insurance policy that would remove these burdens from your loved ones.
What to Buy
There’s no easy answer for determining what you need when shopping for life insurance at 60. Your own needs, health, and financial situation will all play a role.
There are many differences between term and whole life insurance, one being that whole life builds up a cash value. The cash value accumulation can be useful, but only if you buy early on and live long enough to see it grow. Otherwise, it’s hard to justify the cost difference – the same amount of coverage in a term policy is a fraction of the price compared to a whole life policy.
This often makes term life the better choice for those in their 60s and above. You’re better off buying term coverage, saving the difference in price each month, and investing it. In fact, it would take about 15-20 years before the cash value in your whole life policy would equal the money saved by opting for a term policy, after investing the difference in an account earning 4% interest annually.
What the Search is Like
You’ll find that buying life insurance coverage at age 60 is a bit more complicated than in your earlier years.
For instance, you’re not going to find a 30-year term life policy, if you begin your search at 60. Some companies won’t even offer 30-year terms past age 45, so you’ll definitely need to shop around. However, you’re likely to find many options when looking for 20- and 25-year terms, or less.
You’ll also find that the actual application process has changed significantly. For instance, when buying insurance in your 30s and even 40s, you’re subject to a questionnaire and medical exam. Now, though, you’ll find that your insurance company of choice is requesting much more.
In addition to the usual requirements – such as BMI measurements, blood pressure readings, and blood/urine tests – most companies offering life insurance coverage after 60 want to know about your health in more detail. This includes requirements such as EKGs to see how healthy your heart is, as well as other similar tests.
If your EKG comes back as abnormal, you may be asked to schedule a full cardiac workup, or even denied coverage. If you’re approved with abnormal results, it will likely be at a much higher rate than if your results are normal.
How Much You Can Expect to Spend
The premiums you can be expected to pay will vary wildly, based on your preferences and lifestyle. Here are a few things that will impact how much life insurance coverage costs at age 60:
- Your personal health history
- If you are, or have been, a tobacco user
- Whether your parents or siblings passed away before age 65 from cardiac disease
- The state in which you live
- The amount of coverage you want
- The life insurance term chosen
Buying life insurance at a later age can be a bit more involved (and definitely more expensive) than buying when you’re younger. This doesn’t make it impossible, though, or even difficult to find. And buying the right policy can not only ensure your family’s financial security, but even allow you to leave behind a legacy long after you’re gone.
If you’re curious to see how much your policy would cost, and how much coverage you should seek based on your own needs, give us a call. Our licensed life insurance agents are available to help walk you through your options and build the policy that’s perfect for you and your loved ones.