Fact CheckedAge ain’t nothing but a number – but what if you’re looking for the best life insurance for seniors over 60 in Canada?
If you’re over 60 and want the most affordable life insurance, you’re in the right place.
Low-cost life insurance for seniors isn’t just a pipe dream.
If you’re searching for the best life insurance for seniors, always use independent life insurance agent before you sign on.
At Policy Architects, we know how to find you the right policy to fit your unique circumstances. And we can save you thousands of dollars and lots of hassle!
The Best Life Insurance for Seniors in Canada Over 60
Important Birthdays
Are all 60-year-olds created equally in the eyes of life insurance companies?
I mean, seriously, what’s a birthday here and there?
Well, there are substantial differences in how a life insurance company treats a 60-year-old and a 69-year-old, which makes perfect sense.
Life insurance is all about assessing risk, and your risk of dying grows with every birthday you pass.
“Ever since I turned 60 a few years ago, I’ve been realizing that these standard societal notions of what it means to be old – especially for women – just aren’t applying to me. And most important, that I can craft my later years to be what I want them to be, rather than what anybody else tells me they must be.”
Getting Older? Here Are 7 Ways to do it Right! Erika Andersen, Forbes
A Year Here and There REALLY Matters in Your 60s When It Comes to Life Insurance
Let’s consider a man and woman in their 60s applying for coverage. I selected RBC because it’s a very reputable insurer with affordable coverage.
Doug is 60 years old, a non-smoker in standard health, and interested in securing a $250,000, 20-year term policy to protect his mortgage. He qualified at standard rates and is paying $223.81 monthly. His wife Olivia, who is the same age, also qualifies for the same coverage and pays $157.66 monthly.
Right away, it’s evident that our 60-year-old male client, Doug, spends significantly more on his premiums than his female counterpart, Olivia. One of the advantages of being a woman: you pay 30-40% less than men, for life insurance.
As you can see term life insurance for senior citizens is not cheap. Term is temporary and meant to provide you and your family with a safety net for a limited time when you need it the most, to replace income, protect a mortgage or other debt.
Each year you wait to apply, the cost goes up by approximately 8%. So for example, if you’re 61 now and wait to apply for coverage until you’re 62, you’ll pay 8% more for your life insurance than you would as a 61 year old. And so on, and so on, and so on…
The Best Life Insurance for Seniors Over 60 In Canada Is a Moving Target
As you grow older, your life insurance requirements change.
Let’s say you’re 65 years old but you and your wife had a baby when you were 50. Your needs are similar to those of the younger man because your family depends on you financially and you still have children under the age of 18 at home.
Unfortunately, you’ll pay quite a bit more just because of your age. But what options do you have? In your situation, term insurance is still the best solution and more affordable than permanent insurance.
This isn’t the same scenario for everyone in their 60s, though.
Let’s say you are 69 and come into my office as a grandparent. You’re likely more concerned about taking care of final expenses and perhaps leaving some money behind for your grandkids.
In that case, I would NEVER recommend term life insurance. I’d steer you toward a permanent product because its guaranteed for life and covers you until the day you die.
The Best Life Insurance for Senior Citizens Over 60 in Canada Reasons YOU Need Coverage
1. Funeral Expenses
Did you know the average funeral cost in Canada is $10,000 – $15,000? Sheesh! I think many people are entirely unaware of this. If you’re thinking about a basic cremation, that may cost anywhere from $3000 – $5,000 and some folks pay even more.
Sadly, ignorance is no excuse, and if you don’t make a plan, your loved ones will be left with that burden.
You don’t want to leave this issue undone. Do your family a favor and consider purchasing a small, final expense policy to cover these costs. It will provide you with peace of mind.
2. Taxes Associated with Death & Inheritance
Taxes never stop, and your death is no exception. If your estate is bountiful, the Canadian Revenue Agency (CRA) will want to get its hands on it.
To reduce this burden, people with assets use life insurance as an estate planning tool to maintain the value of their estate while leaving money to their beneficiaries.
They buy a permanent life insurance policy to help mitigate estate taxes when they pass away. This allows people to leave more of their hard-earned money to their children & grandchildren.
Perhaps you want your kids to inherit the family cottage. If so, you must consider the tax implications beforehand. A life insurance policy covers these expenses so your children don’t have to.
You can read more about this in my cash value life insurance article.
3. Business Losses & Key People
If you’re in business, people will likely depend on your input.
What if you don’t show up for work one day? What would happen to your enterprise? It would be best to consider taking out a life insurance policy to protect your business from financial devastation.
4. Children & Grandchildren
Maybe you want to leave a gift for your grandchildren.
A life insurance policy allows you to give your grandchildren a gift from the grave. It’s a beautiful planning tool, and the best part is that the proceeds payout to them tax free!
5. Loss of Income
This is the most common reason people buy life insurance. If you’re the breadwinner and have dependents, life insurance is the best way to protect them if you die prematurely.
6. Remaining Debt
You may die, but your debt lives on. If you have a mortgage or credit card debt, you don’t want to leave your beneficiaries to clean up the mess.
Life insurance assures that there is money in the bank to take care of this!
7. Collateral for Loans
People are living longer, launching second and third careers, marrying and divorcing, and doing much more later in life.
If you need a loan, a life insurance policy provides collateral—banks like some assurance that you can pay your debt regardless.
8. A Disabled Child
If you have an adult child with a disability that requires care after your demise, a life insurance policy provides protection.
When you pass away, life insurance proceeds can be deposited into a “Henson” trust that provides money to provide for your disabled child until the end of their natural life.
These trusts are set up so that the money “is not considered an asset of the Beneficiary [your child] when determining eligibility” for government benefits such as ODSP. So in other words, their disability benefits cannot be clawed back or cancelled when the life insurance pays out.
9. Gift for Charity
Leave money to charity and reduce the tax burden on your estate through a life insurance policy.
This is a perfect tool for those with excess cash to dispose of before they pass away.
The idea is to live rich, be generous and die, paying as little tax as possible. It’s an estate planning tactic for those with wealth who want to leave a better world behind.
“Taking out a life insurance policy is not as common, but is actually one of the best ways to leave a charitable legacy. Using an insurance policy with the charity as a beneficiary can be a quadruple benefit if you qualify. The first benefit is that if it is structured properly, the annual insurance premiums can be considered annual charitable giving, so that you get the tax benefit each year.”
Leaving Money to Charity in Your Will? There’s a Better Way, The Financial Post
10. Equitable Distribution of Your Estate
Let’s say you have a business, and only one of your children will inherit it because they are the only ones who showed interest.
This seems unfair because it’s the bulk of the value of your estate!
People in this situation often use life insurance to balance out disbursements. A policy of equal value can be taken out and left to the child or children who will not inherit the business. Win, win!
11. Divorce Agreement
Many Divorce agreements stipulate that one or both parties take out a life insurance policy to protect the ex-spouse.
“Researchers have documented sharp increases in “grey divorce” rates among boomers…the age group of 60 and older saw the most significant change, nearly doubling over the past 10 years”.
Grey Divorce, Why are more baby boomers ending their marriages when they get older?
12. Emergency Funds
If you have a whole life policy, insurance companies typically let you borrow up to 90% of the cash surrender value (CSV) as a loan.
Since loans don’t count as taxable income, you’re not required to pay income tax on the money.
It can also be capitalized so that you defer interest charges until death, and when you pass away, the policy proceeds wipe out the loan & interest.
Any cash left over bypasses your estate and flows directly to your beneficiaries tax-free.
This is a great tool for those who need money for an emergency or to top up their retirement income without paying extra taxes.
When SHOULD Seniors Opt For Permanent Life Insurance?
For senior citizens, term insurance will NOT cover you until the day you die…
…or at least this is what your life insurance company is betting on. most term policies expire at the age of 80 or 85. Which means you could pay thousands into one of these policies and if you live past that age, your policy expires and you have nothing left to show for it.
There are valid reasons to use term coverage in your 60s including income replacement, a divorce agreement or mortgage protection.
However, when you want to leave money behind to cover final expenses, a gift from the grave, to provide for a disabled child, etc., – there is only one option: Permanent Life Insurance!
The Best Life Insurance for Seniors Over 60 in Canada is a Complicated Topic Call Us NOW!
What Suits You in Your 50s Doesn’t Necessarily Work For You in Your 60s and beyond.
That’s why you need to contact an independent agent before you sign on the dotted line. We will conduct a needs analysis to help you make the best, educated decision for you and your loved ones.
Another perk? We also check with the life insurance companies to see which ones may view you more favorably. Sometimes, choosing a no medical policy is less expensive than opting for one with traditional underwriting.
There are so many great choices out there!
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