This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.
Here’s how to determine the right amount of life insurance for the over-60 crowd.
Image source: Getty Images
For many people over 60, life insurance may no longer be necessary or even desirable due to the cost of it. However, there are still some situations in which life insurance can be beneficial. So how much life insurance should someone over 60 have? Let’s take a look at the factors that should be considered when determining life insurance coverage for those over 60.
Age and financial status
The amount of life insurance you need at age 60 depends on your age and financial status. One rule of thumb is the DIME formula, which is a good starting point to determine how much life insurance you need. The formula involves adding up:
Debt: Total outstanding bills plus the cost of final expensesIncome: The number of years of income to replace (including the loss of labor a non-working spouse performs)Mortgage: The outstanding balance of a home mortgageEducation: The estimated future education costs for children
Generally, as you get older, the amount of coverage needed decreases because most of your major expenses have already been paid off. So you may not need life insurance to cover debts and a mortgage, but you may want to provide enough funds to cover any unforeseen costs as well as living expenses for any dependents left behind. However, if you have unpaid debts, it may make sense to maintain a higher level of coverage even after age 60.
Family responsibilities
If you provide a major source of income for your family or dependent children, then more life insurance coverage may be necessary. It is important to consider how much money your family would need to live comfortably without your paycheck coming in each month. Consider all expenses including housing costs, medical bills, education costs (if applicable), food bills, utilities, and any other regular expenses they may incur on an ongoing basis.
This will give you an idea of how much money your survivors would need if something happened to you and will help determine how much life insurance coverage is needed for them to remain financially secure after your passing. If you are in good health and don’t expect to pass away anytime soon, then it might be worth considering purchasing a policy with more coverage so that your loved ones will not be left with any outstanding debts if something were to happen to you.
Final expenses
Life insurance can also provide funds for final expenses, such as funeral costs or estate taxes. Final expense policies are designed specifically for this purpose and typically provide lower levels of coverage than traditional policies (usually around $10,000). This type of policy can be helpful in ensuring that there are enough funds available to cover these costs without depleting any existing assets or savings account balances.
Figuring out the right amount of life insurance for someone over 60 can seem daunting, but it doesn’t have to be complicated. By taking into account factors such as age and financial status, family responsibilities, and final expenses, it becomes easier to determine the best amount of coverage needed at this stage in life. It’s important to keep in mind that life insurance coverage is not just about providing financial security after your death — it also provides peace of mind while you are alive. Knowing that your family will be taken care of financially if something were to happen to you is invaluable, no matter how old you are.
Our picks for best life insurance companies
Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
