Getting life insurance at a young age is a common practice nowadays. It’s a great way to provide security for your family and loved ones if you pass away. But what if you’re already a senior? Is it still okay to get insurance even at the age of 60? How much should you be spending?
The answer to that is YES. It is okay for seniors to get life insurance. You can still benefit from it even if you’re already 60 years old or above. Also, the amount you pay for insurance does not matter as long as the insurance benefits match your needs.
You can use your insurance to pay off debt, cover funeral costs or leave cash benefits for your family.
Why Should You Get Life Insurance Even at 60?
Most people would say that you should only have an insurance policy until the age of 60-65. After that, your finances should be covered by your income, pension, or savings. However, having life insurance at the age of 60 or above would still make sense and here are some examples.
A. Your Children Are Dependent on You
There are lots of cases when children are still dependent on their parents. For instance, you had your children in your 40s, which means that they might still be in college by the time you reach your senior years. Another reason is that you have children that suffer from mental or physical problems.
These are reasons you may want to have an insurance policy even at 60 because you want to provide financial security for your children dependent on you.
B. Leaving A Financial Inheritance
Most people want to provide cash benefits for their children after they have passed just for personal reasons. An insurance policy can grow significantly in value throughout many years, so that’s why some people want to continue their insurance even after they are 60.
The only problem is that rates can increase as you get older, so it’s up to you to decide at which age you can fully maximize the benefits of your insurance.
C. Being In A Complicated Marriage/Relationship
Whole Life Insurance vs. Term Life Insurance for Seniors
By now, the question shouldn’t be about whether you should get life insurance or not, but the questions you should be asking are these:
“How much am I willing to spend?” or “What type of insurance should I get?”
Life insurance can indeed be a little bit more expensive for seniors. Still, different companies have various types of products to offer. Some policies can cost as low as $15/month or as high as $1000/month (or even more). Affordable life insurance exists.
Term life insurance can become challenging to renew as you age because the requirements and rates may change for every term. Meanwhile, whole life insurance is less complicated and has fixed rates. However, that doesn’t mean that one is better than the other because it will always be a case-to-case basis.
Before you decide, let’s get in-depth on what each type of insurance is and what benefits they have. You don’t want to overspend on an insurance policy that you might not even have the chance of maximizing its benefits.
What Is Term Life Insurance?
Term life insurance policies provide coverage for a certain amount of time at a fixed rate and do not build up cash value. It’s one of the most common insurance policies being availed in Canada. In 2019, individual term life insurance made up 38% of Canada’s total distribution of life insurance products, while whole individual life only accounted for 12%.
Age is a significant factor that determines the type of term life insurance that you can get. Policies may vary from company to company, but here’s a basic example of what term-life age limits look like.
|58 years old||30-year term|
|65 years old||25-year term|
|70 years old||20-year term|
|75 years old||15-year term|
|80 years old||10-year term|
Term life insurance rates generally increase along with age, but it’s even more expensive for those above 58 years old. Health status is another factor that can affect the rate. If you have more chronic illnesses such as hypertension, diabetes, or respiratory problems, your rates will most likely increase.
When Should Seniors Get Term Life Insurance?
Seniors should get term life insurance if they want an affordable policy that will cover bills, mortgage, etc., for a specific period if they die. The key is to pick a term that covers the years where you expect to pay big expenses.
What is Whole Life Insurance?
Just like the name implies, whole life insurance provides coverage for the rest of your life. The rates are fixed for the entirety of the policy. As long as you pay your rates, your policy will remain valid.
The significant advantage of whole life insurance is that it builds up cash value similar to a retirement or tuition savings plan. This is one of the reasons why the premiums are higher compared to term life insurance.
You can use a portion or all your insurance’s cash value and use it on anything you want.
However, it’s not advised that you take out all your cash value because you will lose your policy’s death benefits.
When Should Seniors Get Whole Life Insurance?
Seniors who have pre-existing medical conditions that can worsen over time will benefit more from whole life insurance compared to term life insurance.
For example, suppose you bought a 15-year term life insurance, and you died a year after the policy expired due to an illness. In that case, your family members will not be entitled to any cash benefit. Meanwhile, whole life insurance guarantees death benefits because your coverage will not expire if you pay your premiums.