Life insurance for 63 year olds

Birthdays are milestones, and at 63, you’ll need to act fast if you want longer life insurance coverage.

In the world of life insurance, birthdays are key markers. At 63, you’re most likely counting down the days or years until you retire. And you’re probably seriously thinking about taking out a policy to protect your family in case something happens to you.

In your early 60s, you’re still eligible for life insurance, but you can’t afford to wait too long. There are some limitations, especially if you have health issues like high blood pressure or cholesterol, or you’re hoping to purchase a 20- or 25-year term policy. Most insurance companies use the age 63 as a cut-off point — after that, you’ll have to explore a permanent policy.

While life insurance gets more expensive as you age, good rates are within reach, and you’re could be in a comfortable position to pay the premiums for the level of coverage you want.

Which is the cheapest life insurance provider for 63-year-olds?

Let’s use a $250,000 20-year term policy as a starting point. After scouring the market, our research suggests the cheapest life insurance providers for a 63-year-old nonsmoking man are Banner Life and William Penn at $157.43 a month. For smokers, the rate might jump to $445.82 a month.

For a 63-year-old nonsmoking woman, the most inexpensive option is Pacific Life at around $109.65 a month. Smokers can turn to Banner Life and William Penn, which tend to charge $359.18 a month.

Monthly costs of a 20-year, $500,000 term life policy for a 63-year-old in perfect health

What is my risk of dying in the next five years?

You’ve passed a few major milestones, and you can expect to tick off a few more. According to life expectancy data, if you’re a typical, healthy 63-year-old man, your risk of dying within the next five years is 7.73%. For women, the number stands at 4.87%.

It helps to put this into context, so let’s look at the average life expectancy in the US. A man who reaches his 65th birthday is likely to live until 84.3, and a woman can expect to hit age 86.6. These are averages; around a quarter of 65-year-olds will live to 90 and beyond.

When underwriting policies, life insurance companies take two major factors into consideration: age and health. As a relatively healthy 63-year-old, you can still qualify for term and permanent coverage with most insurers — though it’s recommended you sign up sooner rather than later.

Odds of dying for a 63-year-old

What is the typical cost of life insurance for 63-year-olds?

Since life insurance rates are customized to the individual, they can vary between men and women of the same age. Almost all insurance companies cater to seniors, though some are more lenient than others when it comes to taking into account health conditions, family histories, occupations and hobbies.

For a 63-year-old man in perfect health, the typical cost of $500,000 of coverage in a 20-year term policy is likely $323.33 a month. Over the course of the policy, this comes to $77,600.12, with an expected value of $250,136.28. Meanwhile, for a 63-year-old woman in perfect health, the typical cost for this same coverage would be around $238.09 a month, coming to $57,142.52 total with an expected value of $191,413.96.

What is the best life insurance policy for 63-year-olds?

The most popular option among 63-year-olds is term life. It’s affordable, and it provides protection for your family for a set period — for seniors, that’s usually 10 or 20 years. If you die during that time, your policy kicks in to replace lost income, pay off outstanding debt, cover funeral expenses and help your loved ones to maintain their lifestyles. In other words, a term policy offers peace of mind and the knowledge that your beneficiaries will be taken care of.

However, if you’re looking for a longer term, you’ll need to act quickly. For most life insurance companies, 63 is the cut-off for 25-year term policies.

The other option is a permanent policy, such as whole life or universal life. This type of coverage is on the pricey side, but it offers lifelong protection and never expires, so long as you pay your premiums. It also generates cash value over time, which means your beneficiaries receive a larger payout when you die. If you need to access that money while you’re still alive, you can take out loans against your own policy — with interest.

Along with appealing to 63-year-olds who want longer coverage, permanent policies are ideal for those who want to use life insurance for estate planning or legacy purposes. The majority of seniors who go down this route opt for universal life or survivorship policies.

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How do I calculate my life insurance needs?

At age 63, you’re probably on the cusp of retirement. This puts you in a unique position. When you’re working out how much life insurance to buy, consider the following factors:

• Outstanding debt. By this stage of your working life, you might have paid off most of your debts, such as a mortgage, car loan or credit card debt. If so, you may not need as much coverage. But if you have a bit of debt to your name, you’ll want to leave enough money to cover that.
• Dependents. Do you have a husband, wife or kids who rely on your income to survive? Ideally, your life insurance policy will give them the funds they need to pay for their living expenses. To ensure they’re comfortable, you might consider “cushion coverage,” which not only protects your family but helps them to maintain the lifestyle they’re accustomed to. On the flipside, if your spouse is much younger than you and still working and your kids are climbing up the career ladder, you can probably opt for a smaller policy.
• End-of-life expenses. Funerals aren’t cheap. To take the financial burden off your family during that difficult time, you might cover 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 you’ve received an inheritance, it’s a good idea to reassess your coverage.
• Business ownership. Do you own a business? A life insurance policy can give the company a sense of security as well as much-needed cash flow if you die.
• Estate planning. For those with real estate and business holdings, life insurance can add liquidity and help to pay for state and federal estate taxes.
• Social Security. Now that you’re in the retirement planning phase, think about Social Security. 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.
• Legacy. Once your basic financial needs are covered, you can think about leaving a lasting legacy for your kids, grandkids, alma mater or charity. Many seniors opt to funnel their savings into life insurance, as the death benefit is tax free.

Case study

With so many policies and providers to choose from, life insurance can be confusing. To figure out the sweet spot, analyze your financial needs next to your budget. As a senior, the costs between different levels of coverage vary significantly.

Let’s use a 63-year-old nonsmoking woman as a case study.

If she wants to take out a policy for the purposes of replacing her income, paying off debt or covering her burial expenses, she might opt for a $250,000 policy with a 20-year term. For that, Pacific Life, the cheapest provider, tends to charge $109.65 a month.

To give her family a little more breathing room and perhaps provide an inheritance, she might want to increase her coverage to $500,000. In that case, Pacific Life may offer her a rate of $206.73. And if she’s aiming to leave a lasting legacy for her kids — and maybe grandkids — a $1 million policy with Pacific Life might set her back $388.57 a month.

Bottom line

While 63-year-olds in good health can still qualify for good coverage and rates, the options can be limited. Most seniors opt for a 10- or 20-year term policy, which offers protection and peace of mind for their families if they die prematurely. Though it’s less common, others invest in permanent policies that build cash value and offer monetary benefits while they’re alive.

Life insurance is expensive. Before committing, compare life insurance policies to make sure you’re signing up for the one that best suits your needs.

Frequently asked questions

• What health conditions do life insurance companies consider to be too risky?

  It varies between providers — some are more lenient than others when it comes to certain health conditions. For an applicant in their 60s, the most common red flags include high blood pressure, high cholesterol, diabetes, cancer, heart disease and a family history of strokes.

• Can I still apply for a “no exam” policy?

  At age 63, probably not. It’s too risky for the insurer. Once you apply for life insurance, the underwriters will request your medical records from your primary care physician. And to qualify for a preferred rate class — and therefore, cheaper coverage — most life insurance companies want proof that you’ve had a full physical within the past two years.

• Can I increase the death benefit on my life insurance policy?

  Yes. You can apply to increase — or decrease — the death benefit at any time. Your provider reassesses your situation before changing your coverage.