So you’re nearing or already 60 years old and you’re wondering what to do about life insurance?
You’re not alone.
In America, the ages between 60 and 70 tend to have a lot of big, life moments which make life insurance decisions more of a necessity: grandchildren, retirement, and more.
To make a sound decision, you have to take a look at the big picture, as well as a few of the small details to make sure you not only meet all your needs now and in the future, but also stay within budget. Many are worried that they will not be approved for coverage due to health issues such as diabetes or they’re needing life insurance while overweight. We are here to help you better understand your options. There are ways to apply for maximum life insurance coverage that does not require a medical exam, learn here how you could obtain a 1 million dollar insurance policy or term life insurance with no exam required.
The Best Life Insurance For 60 Year Olds
In some cases, it might be none.
And that’s okay! Not everyone has a need for a sizable insurance policy in their 60’s. While we often see plenty of television ads and magazine ads showing a wide assortment of policies where it seems so easy and affordable to purchase a policy, just because it’s cheap and easy doesn’t mean it’s the best decision.
Find the Need
If you don’t have a specific need to hold life insurance at 60, even “a dollar a day” is a waste of $30 a month.
As you get older, needs to change. Kids are going to move out and they don’t rely on your income anymore, debts should be getting paid down, and income should be higher than when you were in your 20’s and 30’s so the extra bit could be saved or invested.
This creates a surplus of cash flow or assets, and a declining life insurance need. These are the only reasons life insurance needs to be purchased after age 60:
- Burial Costs
- Direct Income Replacement
- Pension Maximization
- Transferable Debt
If you can’t seem to find yourself in one of these five categories, you may not need a policy at all.
If you want to prepay your funeral or simply leverage your money to take care of final expenses, a small life insurance policy might be a great fit here. Most insurance companies offer very small policies that you can purchase for a low monthly premium that can pay off your funeral expenses. Your burial costs can easily add up to $10,000, which can be difficult for your family to pay for while their going through the grieving period. If you get one of the smallest insurance policies available, you will be surprised at how affordable the coverage is.
If you can, get a traditionally underwritten policy to save on premiums. Only use a graded or guaranteed life insurance policy as a last resort, because it will cost more and have a modified benefit period in the first few years.
Also, the type of policy when lends itself to this situation best is a permanent one, like a universal or whole life insurance contract. This way, you won’t outlive your benefit.
There are a lot of people that are worried about buying a term policy, and then living past the expiration date of the plan. If this happened, you would have to purchase another insurance policy, or you can purchase whole life coverage.
Direct Income Replacement
If someone directly needs your income, you may want a policy to replace this income should you pass before you reach the end of your working years. If you’re the sole provider of income in the household, and your spouse wouldn’t be able to live the rest of his or her life with the assets you’ve already accumulated, it might be a good choice.
It wouldn’t be fitting if you were taking out a life insurance policy to continue paying for things like vacations, extraneous gifts, or other non-necessity items. This category is needs based only, which makes it easy to see if you’re retired, why you won’t fall under this category.
You’ll need to spend the time to think about if anyone directly relies on your income, if they need, you need to have insurance protection for your loved ones. There is no magic number on how much insurance you should have to replace your salary, but we would suggest around seven times your annual pay.
If you are, or plan to be, a selector of a life-only pension, a life insurance policy can help you to maximize the benefits and guarantee the income stream will continue to your spouse or dependent even after you pass.
When passing, a pension may go with you. But if your pension benefit was used to pay premiums on a policy where the lump sum could be annuitized for your dependents, the benefit would live on.
Some debts get buried with you, others transfer to your spouse or dependents. For those which continue, consider a policy to pay those off if the income stream left behind isn’t enough to take care of the monthly payments without causing a headache. Talk to your loan provider to see which ones end, and which ones don’t.
Because you’re getting close to retirement, more than likely, you don’t have many debts, but there is a chance that your family could be left with thousands of dollars of debt depending on your situation. If you have a mortgage, car payments, or other loans, your family would be responsible for paying for those debts. That’s not exactly the legacy that you want to leave behind.
If you have none of the above but you simply have it in your heart to give even after you’ve passed, a policy for charitable giving or legacy planning may be a fit. This is common for those who have a history of giving and want to leave a lasting memory to a church, university, memorial fund or charity of their choice.
A legacy plan is one where you are leveraging current assets, usually resources you won’t ever need or use, to create a bigger gift upon your passing. Talking with a financial planner or estate attorney may help you to make the most of this decision.
As you can see, there are plenty of reasons that you would want to have a life insurance policy, even in your 60s. It’s vital that your family gets the insurance protection that they need. If you have any questions about life insurance or the different types of policies, please contact us today and we can help you find the perfect policy for you.