Thinking about getting term life insurance but you’re over the age of 60? Here is some helpful information you need to know.
Life insurance is typically purchased during our working years to ensure that our loved ones will be protected from financial loss should something unexpected happen to us.
However, when we reach our golden years (60 years and up), does it still make sense to get insurance now that the kids are all grown up and have jobs of their own? What are the reasons why anyone above 60 years of age needs to purchase term life insurance?
In this article, we’ll cover the most important things to consider when you’re over 60 years old and thinking of getting a term life insurance policy.
Reasons For Getting Term Life Insurance Over 60
Income protection if your family still depends on you
It’s not often that a family will still depend on the breadwinner who’s now a couple years short of retiring. But when this happens, it makes sense to have some financial protection for your loved ones should the unfortunate thing happen.
A 10-year term life policy, for example, could provide a 60-year old policyholder with a decent length of protection (with locked-in rates). This also works if you’re someone who had kids later in life and they’re still attending college or raising grandchildren because their parents are not around.
Life insurance can pay off any outstanding debt.
Do you have any outstanding car, mortgage, or credit card debt? Having unpaid obligations is stressful, and you wouldn’t want to pass on that stress to your loved ones in the event of your death. While a permanent life insurance policy works best in this situation, a decent-length term life insurance could serve as a great alternative.
Life insurance can help cover long-term care costs
Life insurance riders are essentially add-ons that you can include in your policy. They add specific features on top of the death benefit. For example, there are riders for Critical Illnesses (a.k.a Accelerated Death Benefit), Guaranteed Insurability (helps ensure your insurability at a later age or health condition), Accidental Death or Dismemberment (pays out an accidental benefit on top of the actual death benefit/pays a percentage of the death benefit in the case of dismemberment), Waiver of Premium (ensures your policy stays in force and does not get canceled due to disability or illness) and more.
The Accelerated Death Benefit Rider is perhaps the most popular as it allows policyholders to access a certain portion of the death benefit for the treatment of critical disease. This option allows you to pay for long term care or hospice expenses and may even serve as income to allow your partner to take some time off work to spend more time with you during this critical period of your life.
Note though that once used, it will reduce the death benefit your loved ones will receive. You do have the option to choose how much you can use up for the rider.
Life insurance can cover funeral and end-of-life costs
A good number of the elderly nowadays are opting to purchase final expense life insurance—-essentially a small policy ($10,000 to $25,000 average benefit amount) to cover for burial and funeral expenses. But while that’s useful, a term life policy trumps it in terms of the benefit amount.
A 60-year old person, for example, who purchased a 10-year, $250,000 policy will have more than just final expense funds for the beneficiaries, they’ll have plenty of money left for other important expenses that they may need to cover.
Recently bought a house and want to be sure the mortgage would be paid
Worried about passing away while still having an unpaid mortgage? A life insurance policy will give you peace of mind of knowing your loved ones won’t have too much of a hard time paying off the remaining mortgage.
Your partner is not eligible to receive your pension
This applies to non-conventional or complicated relationships or marriages, where the other person is not entitled to receive compensation from pension, should the other pass away. Purchasing term life insurance could cover for lost pension especially if the beneficiary has difficulty supporting him or herself.
Why Choose Term Life Over Whole
Life When You’re Over 60 Years Old?
The answer is simple: Term life insurance provides the best price-to-coverage ratio among all types of life insurance. You can get a sizeable death benefit amount at just a fraction of the price you’ll have to pay compared to, say, a whole life policy, for the same death benefit amount.
You can lock in a specific rate that won’t change for as long as the policy is in force. And when it comes to the elderly, this is highly important since most are no longer working and have no solid source of income outside of their savings and retirement funds. A low-premium term policy will offer a better chance of not getting canceled due to higher-priced alternatives.
For cases wherein you need coverage for just a short period of time, an Annually Renewable Term Life Insurance can be a good choice. For example, when you’re about to retire or have a couple of years left on your mortgage, a short 2-4 year annually renewable term insurance could be less expensive than purchasing a 10-year term policy then canceling it after a few years. As an added bonus, most annual renewable terms don’t require that you take a new medical exam each year.
Sample Term Life Insurance Quotes for 60-Year-Old and Over
To give you an idea of how much you have to shell out for premiums for a term policy if you’re over 60, here are two sample quotes.
|Mutual of Omaha||10 years||$250,000||$66||$763|
|John Hancock||10 years||$250,000||$67||$781|
*Stats above are based on a 60-yr old male living in CA (with a “Preferred” Health Rating, Non-smoker)
|Mutual of Omaha||20 years||$250,000||$227||$2635|
|John Hancock||20 years||$250,000||$239||$2799|
*Stats above are based on a 64-yr old male living in CA (with a “Preferred” Health Rating, Non-smoker)
Other Life Insurance Policies for 60 Years Old And Above
If you’re curious to know about other options aside from term life, here’s a list of policies that are popular among seniors.
Guaranteed Issue/ Guaranteed Acceptance Life Insurance
A common go-to insurance policy of those denied of traditional life insurance (term or permanent), Guaranteed Acceptance Insurance doesn’t require any medical exam and almost anyone can avail of it. The main disadvantage is the low death benefit (maxes around $20,000-$50,000).
Final Expense or Burial Insurance
If you don’t have the need to provide a sizeable death benefit for your beneficiaries and merely want to help them with all death-related expenses when you pass away, then final expense insurance could be your best bet. Just set the proper expectations for both yourself and your loved ones as the amount is far less than what you would get from a typical term life benefit.
Guaranteed Universal Life Insurance
Also called, “No Lapse” and “Secondary Guarantee Universal Life”, GUL combines elements of term and permanent life insurance to provide policyholders with a more flexible option. Unlike term insurance which specifies a certain length of coverage (10, 20 or 30 years), GUL lets you set a specific age that you’d like the coverage to last.
Most companies allow you to pick age 90, 95, 100, and even 120 for the length of the policy which is generally more than enough when compared to the average individual lifespan.
Tips for Getting the Best Life Insurance Policy for 60 Years Old and Over
Shopping for life insurance can either be easy or hard, depending mainly on your situation and the company you’re signing up with. Some newer insurers feature same-day approval policies that don’t even require that you take a medical exam, while some bigger, traditional ones still use the conventional process that typically takes weeks to complete.
To help you improve your chances of getting the best possible deal, here are a couple of time-tested tips:
Know your options
As with any important life purchases, doing your due diligence is key in getting the right type of product. In this case, you have to consider several factors to determine which one will suit you perfectly.
Don’t be swayed by popular choices and instead, list down your non-negotiables in a policy. Is the price of the premium your main consideration? How long will you need coverage?
Which company provides the best combination of price and benefits (that aligns with your preferences)? Would you rather have life insurance that also has a savings component (get a whole or universal life insurance instead if that’s the case)?
All these are questions you should ask yourself so you can have a clear idea of what you need (and should get).
Be accurate in deciding on the face amount you need
There’s no universal rule when it comes to calculating how much life insurance you should get. Some will say get at least 5-10 times your annual salary. Others sum up all their existing debts and payables and then add their estimated amount for the income to be replaced.
However, it will be a slightly different scenario when we’re talking about getting a life insurance policy at 60 years old and over. The priorities and conditions have likely changed and most wouldn’t really need the same benefit amount that they would need during their prime working years.
Ultimately, you’ll have to consider two main things: your capacity to pay premiums (how much and for how long) and what exactly you are trying to get coverage for. For the latter, refer to our section earlier that discussed reasons why you should get life insurance at 60 and over. It will be a good starting point for feeling your way into a policy that will suit you perfectly.
Learn about the riders being offered
Accelerated Death Benefit riders could provide an impactful benefit to older policyholders, as there’s a higher chance of certain illnesses appearing at later stages in life. Instead of using up your (and your family’s) savings and existing assets to treat the condition, you will be allowed to access a portion of your death benefit to fund your expenses.
And while it will reduce the death benefit, it saves you and your loved ones against the financial hardship that comes with paying for expensive medical treatment. Other popular riders include Waiver of Premium for Disability, Guaranteed Insurability Rider, and Partial Benefit Surrender.
Work with a professional life insurance agent
Even with the advent of all the conveniences that insuretech companies brought within the last few years, why do a lot of people still seek out help from professional life insurance advisors?
Life insurance is a crucial and significant investment. Getting insightful advice from a professional agent can help you push past the sometimes complex and highly varied selection of life insurance products. Why risk getting a subprime policy (if you have little knowledge of insurance) when you can have someone assess you and come up with a solid life insurance plan?
It’s similar to hiring a gym trainer to speed up the process of losing weight and getting fit. Sure you can make an intelligent guess and come up with a strategy. But why not simply hire someone who has the experience and expertise to catapult you faster towards your goals? It also helps you save time and effort in the long run. Because you won’t need to experiment and risk paying for something that’s not right for your needs.
With hundreds of options available right now, it’s never been easier to get a term life insurance policy even if you’re 60 and over. And to help you sort through and pick the best insurance, feel free to schedule a call with one of our advisors for a free quote.