How Much Life Insurance Do You Need at 60 Years Old?

When you turn 60, whether or not to buy life insurance becomes an important consideration. Life insurance companies offer policies for seniors to help pay for funeral costs and other large expenses. These are generally whole life insurance policies with level premium payments and guaranteed death benefits. Before you commit to a plan, you'll need to know how much life insurance you need.


Whole life insurance is the most common type sold to seniors over the age of 60. However, universal life insurance with secondary guarantees is another popular kind of coverage. Whole life insurance features level premium payments and guaranteed death benefits as well as guaranteed cash values. Universal life insurance offers flexible premium payments, flexible death benefits and non-guaranteed cash values.


There are many reasons to purchase life insurance when you are 60 years old. The death benefit may be used as burial insurance. Without covering your funeral costs with insurance, you will have to set aside some of your retirement savings, instead. With life insurance, a much smaller portion of your savings, if any at all, can be diverted to paying for your funeral.

If you've taken out a second mortgage on your home or refinanced an existing one, life insurance will guarantee that the mortgage balance is paid off for you, if you purchase the right amount. Your life insurance policy also may be used to insure a reverse mortgage. A reverse mortgage is a mortgage arrangement where you keep the title to your property and the bank sends you payments or a lump sum of money based on the equity in your home in exchange for equitable interest. No repayment of the loan is necessary until you die. At that point, the life insurance policy can be used to satisfy the loan.

Buying life insurance also may help offset any estate taxes due. In 2011, if your estate is valued at over $1 million, you need sufficient life insurance to cover your tax needs. The estate tax is projected to be 55 percent on all amounts over $1 million. This means that you will need an amount of life insurance that will pay for the tax liability over $1 million. For example, an estate valued at $2 million would have to pay $550,000 in estate taxes.


Life insurance may be more expensive to purchase after age 60. This is because the cost per thousand dollars of death benefit will be higher than if you had purchased insurance when you were younger. Additionally, you will need to make premiums payments at a time in your life when you are likely to be nearing retirement and forced to live on a fixed income that is less than your working income.


Making sure that you have enough life insurance to pay for funeral costs allows you to not burden your family after the time of your death, and that should give you peace of mind. Additionally, ensuring that your family has enough money to pay off the mortgage and to cover estate taxes will be the best way to take care of their financial future.


Call several funeral homes to inquire about the average cost of a burial in your area. Consider whether you want to be cremated or buried. In many cases, cremation is less expensive than a traditional funeral. This, in turn, would require less life insurance and lower premium payments.

Make sure that you have correctly assessed how much life insurance you need to cover any remaining mortgage balance you will carry into retirement.

Finally, correctly calculate your expected estate tax liability. Since all amounts under $1 million are not subject to estate tax, you won't need insurance for this purpose if your estate is worth less.