Do you need life insurance after 65?

While many people think that reaching retirement means they won’t need any coverage, not choosing the right policy to meet your financial needs means your family may be burdened with unexpected debt when you pass away.

After 65, your financial situation will likely be much different, but that doesn’t mean you won’t still want to provide an inheritance, supplement long-term care costs for other family members, or provide your next of kin with money to cover funeral expenses.

This article will explain the circumstances wherein someone over 65 still needs life insurance and what policies best suit you.

If you want to set up an inheritance for your heirs, have a way to pay estate taxes, or provide peace of mind to your loved ones, life insurance can still be useful.

Do you still earn outside income?

If you still earn outside income, you need to consider having a vehicle to replace that income if you pass away.

According to the Survey of Consumer Finances, over 50% of households headed by an adult sixty-five or older have debt. So if you have debt and still work to make monthly payments, life insurance could still benefit your loved ones.

Ask yourself whether your immediate family relies on that income for things like:

• Monthly bills
• Property taxes
• Transportation

Are you in debt?

The median debt for households headed by someone over 65 is $31,300. If you have debt, you want to make sure you have a way for your beneficiaries to pay for that debt when you die.

According to the Consumer Financial Protection Bureau, credit card debt does not die with you.

How will you pay for your final expenses?

If you don’t know how your final expenses will be covered and you aren’t 100% certain that the money you have set aside in savings will still be there at the time of your passing, life insurance policies can provide peace of mind.

If you know that you at least have final expense coverage, you won’t be as worried when an accident or an unexpected bill requires you to dip into your savings.

What does your family situation look like?

Consider what your family situation looks like. Maybe you have a child who is dependent on you. Maybe you have aging parents, and you are concerned about their nest egg being sufficient.

Sometimes it isn’t always so black and white:

When my grandfather passed away, not everyone knew he had been supporting a new roommate. That new roommate became very defensive and curt with us in conversation, assuming we were throwing him out of my grandfather’s house. Instead, because of good planning, we sold him the house (as my grandfather had noted in his will) and distributed the profits.

Would it help your estate?

Consider whether it would help your estate. Your estate might be taxed heavily at the time of your passing, in which case a life insurance policy could provide a financial buffer for your beneficiaries.

Tangentially you might have family members who will have to share an inheritance that could be much more easily distributed if one party were to receive a death benefit and another was to receive physical assets.

The older you are, the higher your risk and, therefore, the higher your premiums, so some people over 65 choose alternative solutions that have cheaper premiums, like final expense insurance.

Other people get reduced coverage for their death benefit but supplement it with riders. Think of the death benefit as your entree. It might not be enough to satiate your hunger, but if you add riders (side dishes), it can be a full meal.

For example:

Linda has watched every woman in her family move to long-term care for at least 20 years. She doesn’t want all of her nest egg to be put toward the cost of a care facility. She wants to leave something behind for her kids.

So, at 65 and recently retired she takes out a permanent life insurance policy with a cash value option and a long-term care rider. She knows that this will cover her long-term care, give her collateral in case she wants to continue fixing up her home, with a death benefit that is high enough to compensate for any remaining premiums between now and the time she passes.

Keeping Your Existing Life Insurance

What happens if you already have life insurance when you turn 65? This looks a little different for everyone.

What Happens to My Life Insurance When I Retire?

If you have a life policy provided by your employer, once you retire, the coverage usually ceases. In some cases, you might be able to reassess your coverage and start paying premiums yourself, and in other cases, you might need to apply for a new policy that better fits your circumstances.

Can You Extend or Convert a Life Insurance Policy?

This depends on the policy you have. Several term policies provide an option for converting your coverage into a permanent life insurance policy with increased premiums. There are also options for keeping a whole life insurance policy in place indefinitely so long as you pay your premiums.

Some policies offer accelerated death benefits or cash value that you can access in your retirement, which can help supplement other financial situations prior to your passing.

Pros and Cons of Keeping Life Insurance After 65

Pros:

• You can borrow against the cash value.
• You can continue to have peace of mind.
• You won’t have to submit new medical evaluations.

Cons:

• Premiums will be more expensive after 65.
• Your current policy might be too much for your needs.

When Should You Consider Dropping Your Existing Policy?

You can drop your life insurance policy, cancel a term policy, or choose the option of a life settlement in situations where you have no debt, you are prepared to cover your final expenses, you won’t have estate taxes, you don’t need to worry about an inheritance, and no one is dependent on your income.

Buying New Life Insurance Coverage

At 65 years old, you can still take out a new policy. At this age, you still qualify in most cases for a term or permanent life insurance policy, each of which has different coverage amounts, durations, and premiums.

Term Life Insurance

Term life is still available in several increments. Non-smokers who don’t have high risks can take out policies up to 25 years in length, but those who have several health conditions and are smokers might only qualify for 15 years.

Permanent Life Insurance

Permanent life policies have higher premiums, but as long as you pay those premiums, they don’t expire, so you’ll have coverage indefinitely.

Life Insurance with Long Term Care

Several policies allow you to add long-term care riders, which can give you money if you need long-term care while you are still alive.

Life Insurance with Cash Value

Several permanent life policies come with the option of a cash value account, which you can take out for your needs prior to death or use as collateral when taking out a loan.

Final Expense Policies

Final expense policies, sometimes called burial policies, are much smaller death benefits designed only to cover the final expenses of your funeral.

What Factors Will Affect Your Life Insurance Premiums After 65?

Several factors might affect the decision of an insurer to approve a senior life insurance policy. You can control and modify some of these if necessary before signing a new contract.

Age

The older you are, the more expensive your premiums will be. Taking out a permanent policy at sixty-five can lock you in for fixed premiums for the duration of your policy.

Health

Any pre-existing health conditions or treatment for previous health conditions will increase your risk and influence your premiums.

Coverage

The higher your coverage or death benefit amount, the higher your premiums will be.

Type of Policy

Term policies are cheaper than permanent policies; however, final expense policies are the cheapest because they have such a small coverage amount.

How Much Life Insurance Do You Need as a Senior?

This is based on your situation. Ask yourself:

• How much debt do you have?
• How long until your debt is paid off?
• Is any financially dependent on you?
• Do you want to leave behind a legacy?

The table below indicates how single differences in health status, like smoking or pre-existing conditions, can significantly increase the average cost of premiums.

Reasons to Get Life Insurance After 65

There are several reasons you might still need to get life insurance, most of which people don’t think about.

Long-Term Care Needs

According to the US Administration for Community Living, 65-year-olds have a 70% chance of needing long-term care at some point. Over 20% of people who start long-term care require it for more than 5 years.

If you don’t want someone else to be responsible for the cost of your long-term care, this might be a rider worth obtaining.

Tangentially, even if you are in sound health right now, that does not mean you won’t face unexpected health risks down the line. If your retirement income is sufficient to support your lifestyle as is, it may not be sufficient to support an unexpected disability or severe medical condition.

You can add to your policy such that you have protection specifically for the circumstances.

Supporting Others

If you are currently supporting another member of your family, like your parents, or a disabled child, you’re probably more likely to consider getting insurance after 65 in order to cover their long-term care costs as well.

Even if you aren’t, be a little nosy and ask your parents what their financial situation is like and whether you might one day be responsible for their care.

Supporting others can also apply to the support you want to provide for your beneficiaries when you pass away. This might include enough income to cover your current cost of living for several years so that they don’t have to go back to work or go into debt covering your burial expenses.

Debt and Income

Do you have any existing debt? You’ll need to make sure you have a way for your beneficiaries to cover the cost.

Are any of your current family members dependent on your income? Even if you and your spouse both bring home regular income or regular retirements, your current standard of living might be contingent upon having both income streams available to you.

Life insurance policies can supplement in the event that the worst happens.

Children

If you have children, there are several circumstances wherein having a life insurance policy might be a sound investment.

• If you have younger children who are starting families of their own, you might want to set aside money to pay for education.
• If you have several children, a life insurance policy might provide even distribution of an inheritance, particularly if one child is already inheriting a house and another is inheriting Investments or a business.

Estate Taxes

For those with large enough estates, there could be significant taxes waiting for your beneficiaries. Even if you don’t have debt, you aren’t supporting anyone and your end-of-life costs are covered, you’ll still want to make sure there’s enough in your estate, including your life insurance policy, to cover the taxes.

Best Life Insurance Companies for Seniors After 65

According to US News, the top three companies for seniors in 2023 are New York Life, Prudential, and State Farm.

New York Life

New York Life offers several term and permanent policies with the ability to customize your coverage amount. The downside is you can’t apply online, and you’ll likely have to submit to a medical exam.

But your willingness to work with an agent directly means you can take out term life insurance policies up to 20 years in length with the option to convert them at their expiration into a permanent policy. You can also choose from several permanent life insurance policies and customize your death benefit amount.

Prudential

Prudential lets you take out a policy up to age 90 with several riders available. The only downside is if you live in New York, some of their policies aren’t available to you, and they increase their premiums on several term life insurance policies after the first year.

Still, they have over nine plans which is significantly more than most other insurance companies offer, and you can choose riders such as:

• Enhanced cash value
• Overload protection
• Accidental death benefits
• Estate protection

State Farm

State Farm has life insurance policies that don’t include a medical exam. This is better for people who need a policy sooner rather than later. They have a guaranteed issue final expense policy that you can take out until you turn 80.

With State Farm, you also get different riders, such as:

• Payor insurance
• Flexible care benefits
• Waiver of premium for disability
• Guaranteed insurability

Married? With State Farm, you can pick whole life insurance policies that provide death benefits for you and your spouse.

What to Look for in Life Insurance

• Duration of policy and duration of benefits
• Peace of mind vs. cost
• Additional coverage needs
• Premium payments and whether they will take away from your current income or not