Set your family up for the future and sail into retirement by locking down a life insurance policy now.
While life insurance is highly personalized, there are some constants: Namely, your age and health affect your coverage. In your early 60s, you’re likely edging closer to retirement and considering a policy to protect your family and finances when you’re no longer around.
At 62, you’re still eligible for life insurance, but you may want to apply sooner rather than later to access the type and amount of coverage you want at the best possible rate. Though there may be some limitations, especially if you have a health condition or you’re looking to buy a 30-year term policy, you still have a suite of options. Plus, at this stage of your working life, you’re probably in a good position to pay the higher premiums for seniors.
Which is the cheapest life insurance provider for 62-year-olds?
Let’s take a $250,000 policy as an example. Our research suggests two of the cheapest life insurance providers for a 62-year-old nonsmoking man are Banner Life and William Penn at $142.82 a month. If you smoke, that rate might climb to $418.95 a month.
For a 62-year-old nonsmoking woman, the most cost-effective option may be Pacific Life at $98.17 a month. Smokers can look to Banner Life and William Penn, which tend to charge $325.42 a month.
Monthly life insurance costs for a 62-year-old in good health
|Provider||$250,000 coverage||$500,000 coverage||$1,000,000 coverage|
|Banner Life (LGA)||$142.82||$267.29||$522.48|
|William Penn (LGA in New York)||$142.82||$267.29||$522.48|
|AIG Life Ins (American General)||$146.75||$273.69||$528.00|
|US Life (AIG in New York)||$146.75||$273.69||$528.00|
|John Hancock USA||$160.54||$279.32||$520.67|
|Principal Life Insurance||$143.52||$280.48||$540.77|
|Lincoln Financial Group||$200.05||$271.86||$531.48|
|Mutual of Omaha||$167.56||$316.53||$603.09|
What is my risk of passing away at 62-years-old?
You’ve made a lot of memories in your time, and you can expect to make many more. According to our life expectancy data, if you’re a typical, healthy 62-year-old man, your risk of passing within the next five years is 7.24%. For women, the number is a little lower at 4.48%.
To put this into context, let’s look at the average life expectancy in the US. A man who turns 65 can expect to live until 84.3, and a woman is likely to live to age 86.6. These are averages; around a quarter of 65-year-olds will hit their 90th birthday.
When underwriting policies, life insurance carriers take your age and health into account. As a healthy 62-year-old, you may still have a good chance of qualifying for coverage with most insurers, though you may want to sign up soon to lock in the best rate.
Odds of passing away for a 62-year-old
|Within the next…||Male||Female|
Life expectancy rates are merely calculations based on averages of mortality among specific population, gender and age groups. They do not predict the specific life expectancy of any one person - including you. If you're concerned about your overall health and risks, talk to your doctor or health professional.
What is the typical cost of life insurance for 62-year-olds?
Life insurance is tailored to the individual. While age is a major consideration across the board, insurers put more or less of an emphasis on health conditions, family histories, occupations and hobbies. This causes the rates between men and women of the same age can vary.
For a 62-year-old man in perfect health, our research suggests the typical cost of $500,000 of coverage in a 20-year policy is around $284.26 a month. Over 20 years, this totals $68,221.66, with an expected value of $234,227.16.
Meanwhile, for a woman, the same coverage costs $197.64 a month on average. Over the course of the policy, that comes to $47,434.71, with an expected value of $176,396.68.
What is expected value and how is it determined?
The expected value (EV) of a life insurance policy is the anticipated value based on the odds that you’ll die and your death benefit are out. You can find the expected value by multiplying the probability of you dying by the payout of the policy. If the expected value is higher than the total cost of the policy over the term length, then it may be considered a good investment. However, if the expected value is less than the total amount you’ll pay into the policy throughout the term, then you may want to look at other providers or alternatives to life insurance.
Let’s look at an example. Say you’re a 50-year-old nonsmoker who’s thinking about taking out a 20-year term life policy for $500,000 at $79.88 a month. As a man, you have a 20.97% chance of dying within the next 20 years, so you multiply that by $500,000 to get an expected value of $104,859.38. Since the total cost of your policy over 20 years adds up to $19,171.89 — less than the expected value — then your life insurance policy may be considered a good investment for the future.
What is the best life insurance policy for 62-year-olds?
It comes down to your financial situation and goals for the future. That being said, most 62-year-olds choose a term life policy. It’s the cheapest option, and it offers protection for your family for a set period. For seniors, 10 or 15 years usually suffices, especially if you’re simply taking up a policy to replace lost income before you retire. If you die during that time, your policy covers your funeral expenses, pays off your debt and helps your loved ones maintain the lifestyle they’ve become accustomed to. And if you’re looking for a 25-year policy, you have a short window to sign up; the cut-off for most insurers is 63.
In a nutshell, term life serves well for near-future needs.
To leave a sizeable legacy or use life insurance for estate planning purposes, explore a permanent policy. These policies are more expensive, but they offer lifelong protection. They also accumulate cash value over time, so your beneficiaries receive a death benefit plus an added cash value benefit when you die. If you need to access money quickly while you’re still alive — to pay for your long-term care or your grandkids’ college costs, for example — you can take out loans against your own policy. Leveraging life insurance for estate planning has more benefits. First, it’s a ready-made estate; you don’t need to ask for permission or wait for a trust to be formed. Second, the death benefit is not subject to an estate or death tax.
The majority of 62-year-olds opt for universal life or survivorship policies, particularly if their spouse is younger and healthier than them.
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How do I calculate my life insurance needs?
At age 62, you’re probably nearing retirement or enjoying the freedom that comes with it already. This puts you in a unique position compared to if you were buying life insurance just 5 or 10 years earlier.
When you’re calculating your life insurance needs, consider the following factors:
- Outstanding debt. Now that your career has spanned decades, you may have paid off most of your debts, such as a mortgage, car loan or credit cards. If so, you may not need as much coverage. If you do have existing debt, your policy should cover that.
- Dependents. Do you have a husband, wife or children who rely on your income? You’ll want to leave enough money to pay for their living expenses. You can also add cushion coverage, which not only protects your family but helps them to maintain the lifestyle you’ve provided over the years. On the other hand, if your partner is still working and your kids are establishing their own careers, you might be able to opt for less coverage.
- End-of-life expenses. Funerals are expensive. To take that financial burden off your family, you might consider covering your own funeral and burial expenses.
- Care. Are you paying for an aging parent’s medical expenses or nursing home costs? Factor that in.
- Inheritance. If your parents have passed away recently and left you an inheritance, reassess your policy.
- Business ownership. For business owners and partners, a life insurance policy can float the company and give its employees a sense of security if you die.
- Estate planning. Do you have real estate or business holdings? It’s worth looking into life insurance — it can add liquidity and assist with paying state and federal estate taxes.
- Social Security. At 62, you’re most likely in the retirement-planning phase. If you or your spouse has decided to hold off on your Social Security benefits, which become available at 62, life insurance can bridge the gap in case one of you dies.
- Single or joint annuity. This is especially important if your husband or wife is younger than you. Upon retirement, you may be given the option of a $50,000 a year single annuity payment for as long as you live, or a joint annuity payment of $40,000 a year for you and your spouse for as long as you both live. If you buy life insurance, you’ll be in a better position to take the $50,000 single life annuity.
- Legacy. Once your financial obligations are accounted for, you can turn your attention to your legacy. To leave a lasting legacy for your kids, grandkids, alma mater or charity, you may choose larger coverage. After working hard their whole lives, many seniors opt to invest in life insurance, as the death benefit is tax-free.
With life insurance, you’re spoiled for choice. Every provider has an angle, and every policy has its benefits. Ultimately, the best life insurance policy for you depends on your financial needs and budget. As a senior, there can be huge price hikes between different levels of coverage.
Let’s look at a 62-year-old nonsmoking woman.
If she’s interested in purchasing a policy to pay off debt, cover her funeral expenses and replace her income when she dies, she might opt for a simple 20-year term life policy with $250,000 of coverage. According to our research, Pacific Life, one of the cheapest providers, may offer her a rate of $98.17 a month.
To give her family the funds they need to not only survive, but thrive, she might consider increasing her coverage to $500,000. Pacific Life may charge her $183.60 a month. And if she’s set on leaving a lasting legacy and a hefty inheritance to her kids or grandkids, a $1 million policy may cost her $345.84 a month.
A relatively healthy 62-year-old can qualify for coverage and preferred rates. While life insurance is more expensive at this age, you still have solid options. Many seniors opt for a 10-, 15- or 20-year term policy, which gives their families and businesses a sense of financial security in case something happens to them. Permanent policies are attractive for those interested in estate planning. They build cash value and allow you to access that money while you’re still alive.
Before settling on a policy, check out our comprehensive guide to life insurance and compare providers.