Life insurance ensures your dependent will have financial resources if they lose you and your income. For the same reason, most Canadians over 60 might not have a real need for the protection it offers.
They may have financially independent children, no mortgage repayments, and enough funds in their investment and savings account to live off them. However, not everyone fits into this scenario.
There are many situations in which having insurance in your 60’s might make sense.
Do I Need Life Insurance as a 60-year-Old?
You may need life insurance in your 60’s as much as ever if any of these situations apply to you.
You are still working in your 60’s
If you are over 60 and your household depends on your monthly paycheck, strongly consider buying life insurance. Term life insurance, which provides coverage for a limited period, can be a good option for you. Just make sure the policy term is long enough to cover you until you plan to retire.
You have a high net worth
For affluent seniors, a permanent life policy can be an essential part of estate planning. It can help minimize estate taxes, which can otherwise chip away at the inheritance you want to leave your children and grandchildren.
You have someone in your life who depends on you financially
If you are currently responsible for an adult child with disabilities, who will look after them when you pass away? A permanent life insurance policy, along with careful trust planning, can ensure any dependents receive a high standard of care even when you are no longer there.
You want to leave an inheritance
Permanent life insurance is a great vehicle for inheritance if you simply want to leave some money for your loved ones or a charity since the payout is usually tax-free.
Since getting life insurance at 60 can become costly, it is recommended to speak with an advisor who can get you the best rates possible.
You have several years left on your mortgage
If you are still paying mortgage, ask yourself: Would your spouse be able to keep the home if you died today?
Loss of a spouse is one of the main reasons for foreclosure. You can ensure this does not happen to your family by putting in a life insurance plan in place. Term life insurance can financially protect your home by providing coverage until the mortgage is paid off.
You do not want to burden your family with your funeral expenses
The average funeral costs around $10,000, but this is dependent on many factors. For example, funeral home fees in Canada can vary wildly, depending on where you live. If you do not want your loved ones to shoulder your end-of-life expenses, a final expense life insurance policy might be right for you. This is a small permanent life insurance policy — usually not more than $25,000 — intended to cover these costs.
Is Life Insurance Worth It?
Depending on your personal situation, it may be worthwhile to keep your existing policy going or purchase a new one.
Should I Keep My Current Life Insurance Policy?
Does your household depend on the paycheck you bring home every month? More and more Canadians are working past the retirement age of 65. If you are one of them, you may want to cover your annual income with a life insurance policy.
Likewise, if you have a lifelong dependent, want to use your cash value to fund your retirement, or wish to leave an inheritance, then it is wise to keep your policy active.
Should I Purchase a Life Insurance Policy?
Life insurance premiums go up as we age. Nevertheless, if you are in good health, you can get reasonably affordable quotes for term life insurance. So, if you did not purchase a policy in your 40’s or 50’s but are in decent health, term life insurance is worth considering. This is especially true for seniors who are still working or have a few years left on their home loan.
Permanent life policies without cash value can be a smart option if you support an adult child with disabilities, want to leave an inheritance, or wish to preserve the value of your estate. While these policies are more expensive than term life, the premiums might still be within your budget. However, permanent life insurance with cash value is generally not recommended for seniors, as premiums are prohibitively expensive.
If you want a small policy to cover funeral expenses or have underlying health issues, consider guaranteed life insurance. Acceptance to such policies is guaranteed, though the coverage is usually more expensive.
Factors That Affect the Cost of Life Insurance
The premium rates are dependent on your unique risk profile, the type of policy you want, and the amount of coverage you need.
- Age – Your life expectancy decreases as you age. In other words, the older you are, the higher the price of life insurance. For every year you delay buying coverage, the premiums go up by 8-10%. However, for those in their 60’s, the increase may be even greater.
- Gender – Since women live longer than men on average, they usually pay less for life insurance.
- Smoking status – If you smoke and are in your 60’s, you are likely to pay several times the non-smoking rate. And if you have an underlying health condition, like high blood pressure, you might not even qualify for a traditional policy. A guaranteed policy, which does not involve a medical exam or health questions, might be your only option to get some life insurance.
- Health – Life insurers look at your overall mortality risk. So, any illness that may shorten your life will not sit well with them. Brace yourself for considerably higher premiums if your BMI is above normal or diabetes poorly managed.
- Family medical history – Certain diseases, like diabetes and heart disease, have a genetic component. If genetic inheritance disorders tend to run in the family, the insurer may quote higher premium rates.
- Type of policy – Broadly speaking, life insurance policies come in two types – term life and whole life. Term life insurance is the most affordable and provides coverage for a set number of years. Permanent life plans, by contrast, do not have an expiry date. They will cover you as long as you live, provided you pay premiums. Some permanent policies also build cash value, which you can tap into while you are still alive. Since permanent life insurance offers features lacking in term life, it is significantly more expensive — about six to 10 times.
- Amount of coverage – The greater the policy’s face value, the more you will pay for coverage. A $1 million plan will be pricier than a $50k policy, other things being equal.
How Much Does It Cost?
How much does life insurance cost for people in their 60’s? It is a tough question to answer because many factors impact premium rates.
Here are sample rates for someone who is 60-years-old. Life insurance rates increase sharply in your 60’s, so if you believe you need life insurance, do not put off buying it. For every year you delay, you may have to pay 9% to 14% more.
A healthy, non-smoking male aged 60 may pay $97 for a 20-year term plan with a $100,000 death benefit. A policy with the same term and death benefit may cost $260 for a 69-year-old healthy male.
Since women tend to live longer than men, they get much better rates. While a 60-year-old healthy female may pay $64 a month for a 20-year, $100,000 policy, the same coverage may cost $177 when you turn 69.
At 60 years old, you still have plenty of life ahead of you. That’s why it’s important to consider what life insurance options are available to you and find the right plan for your needs. We’ve outlined some of the best life insurance plans for 60 year olds and factors that will influence your decision.
Use this information as a starting point to explore your options and find the coverage that gives you peace of mind.