Understanding Life Insurance for Seniors
As people age into their 60s and 70s, their need for life insurance often changes. For younger individuals, such as young parents or homeowners, the importance of life insurance is clear: it provides financial security for loved ones in case of unexpected death. However, for older adults, the decision to maintain or purchase life insurance becomes more complex.
Keeping Your Life Insurance
You might still need life insurance in your 60s if:
- You’re still working and your income is crucial for your spouse or dependents.
- You have a high net worth that may be subject to estate tax. Financial advisors often recommend permanent life insurance for individuals with significant assets. For instance, in 2025, estates valued over $13.99 million may be subject to estate tax.
- You still financially support children or other family members.
- You plan to use the cash value of your permanent life insurance to fund your retirement.
Buying New Life Insurance
Purchasing life insurance later in life can be challenging due to increasing premiums with age and potential health issues. For example:
- A $500,000 whole life insurance policy for a healthy 60-year-old man costs around $1,392 monthly, while for a woman of the same age, it’s about $1,220 monthly.
- In contrast, term life insurance can be more affordable. A healthy 60-year-old can secure $500,000 of coverage for 20 years at a monthly cost between $138 and $196.
- If you’re in poor health, guaranteed issue life insurance is an option, though it’s more expensive and may not pay the full benefit if you die within two years of purchasing.
Combining Life Insurance with Long-Term Care
You can combine life insurance with long-term care benefits in two main ways:
- Life Insurance Policy with a Long-Term Care Rider: This allows you to access a portion of your life insurance benefit if you need help with daily living activities.
- Hybrid Life Insurance and Long-Term Care Policy: These policies offer flexibility in using long-term care benefits and can be paid with a single premium or ongoing premiums.
Extending or Converting Your Policy
If you have an existing policy:
- Whole Life Insurance: Can be maintained for life as long as premiums are paid.
- Term Life Insurance: You can renew your policy without a medical exam, though premiums will increase. Some policies allow conversion to whole life insurance before the term expires.
Dropping Your Life Insurance
If you’re in your 70s with no financial dependents and have paid off significant debts, you might not need life insurance. You can:
- Let your term life insurance expire.
- Cancel your coverage and stop paying premiums.
- For permanent life insurance, you can surrender the policy for its cash value, minus any fees.
- Consider a life settlement by selling your policy to a third party.
The Bottom Line
Reassess your life insurance needs in your 60s and 70s. Discuss your options with a financial advisor to determine the best course of action for your situation. Dropping coverage might free up budget space, but reapplying later can be costly.
