Life Insurance After 65: Essential Protection For Peace Of Mind

Life insurance is often viewed as a necessity for those with financial dependents, such as children or a spouse, or those with outstanding debts, such as a mortgage. However, as people age and their financial responsibilities shift, the need for life insurance can change. While some individuals choose to maintain their life insurance policies into retirement to cover burial expenses, pay off remaining debts, or leave an inheritance, others may find that their coverage needs decrease as their financial obligations are met. For those over 65, the decision to keep or discontinue life insurance depends on factors such as income replacement, debt burden, inheritance goals, and the presence of dependents who rely on their financial support.

Life insurance can be useful at any age, but it depends on your financial situation

For those who are retired, have no debt, and have financially independent families, life insurance may not be necessary. However, for those who are still working past the age of 65 and have others relying on their income, life insurance can act as income replacement in the event of their passing. This is especially useful if you have a mortgage or other debts that your family would struggle to pay without your income. Additionally, if you have children or elderly parents who are financially dependent on you, life insurance can help provide for them after you're gone.

Another reason to consider keeping or purchasing life insurance after 65 is to cover burial expenses and other final costs. While this may not be a concern for those with substantial savings or assets, for others, the cost of funerals and other end-of-life expenses can be a burden on their families. Life insurance can help ease this financial strain by providing a payout to cover these costs.

Life insurance can also be used to create or increase an inheritance for your loved ones. If you want to leave a larger financial legacy but don't have the liquid assets to do so, life insurance can provide a substantial payout to your beneficiaries. This can be particularly useful if you have outstanding debts, as the insurance payout can help offset the reduction in assets that would otherwise be used to pay off those debts.

It's important to note that the cost of life insurance increases with age, and pre-existing health conditions can further impact the availability and cost of coverage. However, term life insurance is generally a more affordable option for older adults, as it covers a specific financial challenge, such as covering a mortgage or providing for a loved one, for a short period of time. Additionally, if you have an existing policy, you may be able to renew or extend it, though this will likely result in higher premiums.

You may want to leave a larger inheritance for your family

Life insurance can be useful at any age, and this includes people over 65. One of the reasons you may want to keep paying for life insurance after 65 is to leave a larger inheritance for your family.

When you are younger, life insurance can be used as income replacement. It may be part of your work benefits package and chosen because of family circumstances, mortgages, college funds, or other expenses that need to be paid if you are not around. However, the type of insurance you needed during your career may be different from what you need after retirement.

After you retire and your children grow up, you may no longer need life insurance. However, you may still want to leave a larger inheritance for your family. If you have no income to replace, very little debt, and a self-sufficient family, you may still want to keep your life insurance policy active to benefit your family after your death.

Life insurance payouts go directly to your heirs rather than towards your debts, so insurance can ease their financial burden. If you still work after 65, insurance can replace your income and any job-related benefits that would otherwise end with your death. You may also support children still living at home or elderly parents who require care. In this case, you should consider your dependents' future expenses, such as weddings or college tuition, too.

It's important to note that insurance premiums rise with age. While a 35-year-old man can expect to pay $20.90 per month for $500,000 worth of coverage, a 65-year-old man would pay $256.92 for the same coverage. Despite this, life insurance at 65 is still attainable and affordable if you know where to look. For example, term life insurance is the cheapest and best option for most life insurance buyers who need coverage for a specific financial challenge, such as providing for a loved one.

You may still have debts to pay off

Life insurance is often considered unnecessary after 65, as people have retired, their children are grown up, and they have paid off their mortgages and other debts. However, this is not always the case, and some people still have debts to pay off even after they turn 65.

If you are still working at 65, you may want to keep your life insurance to replace your income and any job-related benefits that would end with your death. This is especially important if you have others relying on your income, such as a spouse, children, or elderly parents who require care. In this case, life insurance can ensure that your loved ones will be provided for financially even after you are gone.

Additionally, you may still have outstanding debts such as a mortgage, car loan, student loan, or credit card bills. While these debts can be paid off with your estate's assets after your death, this will reduce the amount that your heirs receive. Life insurance payouts, on the other hand, go directly to your heirs, easing their financial burden.

Furthermore, life insurance can help cover burial expenses, which can be significant. According to NerdWallet, a 20-year term life policy for a 60-year-old man in excellent health is around $4,575 per year, while a whole life policy is $10,113 per year. These costs increase with age and can be even higher for those with pre-existing medical conditions. However, term life insurance is generally the better choice for older Americans, as it is less expensive and covers a short period of time.

In conclusion, while life insurance may not be necessary for everyone over 65, it can still be useful for those who have debts to pay off or want to provide financial support for their loved ones after their death. By considering factors such as financial obligations, family needs, and resources, individuals can make an informed decision about whether to maintain or forgo life insurance coverage after turning 65.

You may have others relying on your income

Life insurance can be useful at any age, including after 65. One of the reasons why you may want to consider keeping or getting life insurance at this stage of your life is if you have others relying on your income.

If you are still working past the age of 65, insurance can replace your income and any job-related benefits that would end with your death. This is especially important if your household relies on your income to maintain its standard of living. For example, if your spouse is responsible for childcare and household duties, your income is essential to supporting your family and their lifestyle.

Additionally, consider your dependents' future expenses, such as weddings or college tuition. If you have children who are still financially dependent on you, life insurance can help provide for them even after your death. This is particularly relevant if you have children still living at home or elderly parents who require care.

Furthermore, if you have an outstanding mortgage, car loan, student loan, or credit card bills, life insurance can help ease the financial burden on your heirs. This is because life insurance payouts go directly to your heirs, rather than towards paying off your debts. By having life insurance, you can ensure that your heirs receive a larger inheritance and are not left with the financial strain of settling your estate.

It is important to note that the cost of life insurance at age 65 is generally higher than at younger ages. Premiums increase with age, and pre-existing medical conditions can also impact the cost and availability of coverage. However, term life insurance is generally a more affordable option for older individuals, as it covers a short period of time and is useful for specific financial challenges, such as providing for loved ones.

You can choose from different types of life insurance

Life insurance can be useful at any age, and there are several types of life insurance that people over 65 can choose from. The type of life insurance that is best for you will depend on your health, budget, and goals.

Term Life Insurance

Term life insurance is the cheapest and best option for most life insurance buyers who need coverage for a specific financial challenge, such as covering a mortgage or providing for a loved one. Term life insurance policies last a set number of years and are generally a good choice for older Americans buying a new policy. Term life insurance is less expensive than whole life insurance because it only covers a short period of time.

Whole Life Insurance

Whole life insurance costs more than term life insurance and offers permanent coverage. Whole life insurance policies last for the insured's entire life and build cash value. Retirees who can afford the higher premiums can benefit from the investment potential of permanent insurance's cash value accumulation feature.

Final Expense Insurance

Also known as pre-need, funeral, or burial insurance, final expense insurance is a popular option for seniors who want to ensure that their loved ones are not burdened by the cost of their burial, outstanding medical or legal bills, or other expenses. Final expense insurance is a guaranteed-issue whole life policy, so there is no need to worry about it expiring or having to get approved or take a medical exam. However, it can be expensive, especially considering the payout is usually limited, typically between $5,000 and $25,000.

Universal Life Insurance

Universal life insurance is offered by some insurers for applicants up to the age of 85 or 90. Universal life insurance often costs more than term life insurance because it lasts for the insured's entire life.

Riders

Riders are available for many policies, such as estate protection, enhanced cash value, overload protection, and accidental death benefits.

Frequently asked questions