Getting older is a natural and beautiful part of life. People are living longer, enjoying their lifestyles and favourite activities well into their later years.
As life expectancy increases, more seniors are choosing to retire later.1 Experts are also putting pressure on the Canadian government to increase the retirement age from 65 to 67.2 As a result, many older people are seeing the value of having a plan for the future by purchasing life insurance.1
From the age of 50 plus, many insurers consider this age as being a senior. Those in this age demographic are in all likelihood active, productive and not at all reflective with the misconception of what society often leads us to believe being a senior is. In a lot of ways, this population is thriving and living life to the fullest, alongside younger generations. Having a life insurance policy empowers those who are older to choose how they are going to financially protect their loved ones when they pass away.
It’s important to recognize that more retirees are taking debt into retirement and this can leave a large burden for loved ones left behind.3 In fact, 1 in 3 Canadians take some form of debt into retirement.3 As a result, the ageing population is now realizing the financial responsibility that they have to tie up loose ends before they pass away.
Although, it can be more difficult to insure older people, life insurance can help give you the peace of mind that you can provide financial assistance for your loved ones when you pass away such as paying for education, covering outstanding debts, and covering final expenses. Even healthy seniors can face difficulties qualifying for life insurance. While, there may not be as many options as when we were younger, the good news is that there are still plenty of choices for purchasing life insurance after the age of 50. Nowadays, more life insurance providers are catering their products to seniors, and with no medical insurance options, it’s much easier to get coverage despite your medical conditions.
If you fall into this age demographic, learn more about life insurance, so you can find the best protection for your loved ones.
As a senior you can benefit from life insurance in many ways:
If your dependents are relying on your income, then the death benefit from life insurance can help them in your absence with income replacement. Even if your children are now independent, you may have a spouse that is disabled, in poor health or simply relies on you. We often do not take into account the financial impact this could have on them. By having a way to replace your income, you can have the peace of mind that they will continue to have financial stability.
The death benefit can contribute to the ongoing expenses of your dependents. Your loved ones won’t have to move to another home or experience other large lifestyle changes as a result of your passing.
Pay for education
Are you helping to pay for your children’s or grandchildren’s education? The death benefit from life insurance can allow you (your beneficiaries) to continue to cover these expenses. However, it’s important to note that tuition expenses are just one part of education expenses. There are many other expenses such as books, residence costs, groceries etc. that your child or grandchild may also have been relying on you for.
Rising education costs in Canada means you’ll need a large enough policy to cover these expenses. For example, according to MacLean’s magazine, the average cost for a student to attend university is almost $20,000 a year.4 In the past decade, university tuition fees have risen by 40%.5 To better plan for the future, keep in mind that education costs may continue to rise for your dependents.
By purchasing a life insurance policy you’ll be able to uphold your commitment and continue to give the gift of education to your family.
Cover outstanding debts
Although you may have paid off some of your debt during your lifetime, there may have been a few outstanding debts that you were unable to cover. More Canadians are becoming concerned with their debt obligations.6 Debt can include mortgages, student loans, payday loans, outstanding balances on credit cards or lines of credit, or any other unpaid debt or liability.
A mortgage can be a large outstanding debt that you may unintentionally leave behind. However, this debt can weigh heavily on your loved ones if you don’t plan for the future with life insurance. The death benefit from a life insurance policy can provide a quick cash injection to pay off your mortgage or continue to make mortgage payments if your beneficiaries decide to keep the house.
Other outstanding debts to consider like personal loans that you may have taken throughout your life for reasons such as home improvement, rent, electricity bills, medical expenses, funding a small business, and travel. Would your family be able to manage these expenses if you were to pass away?
Cover final expenses
In the case of unexpected death, you don’t want your family to foot the bill for your funeral costs. From the death certificate to the service and everything in-between, there are many costs associated with death that you may not be aware of.
Although, funeral costs depend on the province that you live in, they are still a sizable, but essential cost to consider. To help with affordability cremations are becoming increasing popular because they are less expensive than burials.7 Other expenses include the taxes and lawyer fees to help organize your will/estate.
If you plan ahead with life insurance your beneficiaries can use the death benefit to cover these expenses when you pass away.
The selection available of life insurance for people in this age range is increasing, so you have a better chance of qualifying and have more options to choose from:
If you want coverage for the duration of your life, permanent life insurance can be a good option. Although, permanent life insurance policies tend to have higher premiums, one of several reasons you may want to purchase this type of insurance is because it offers coverage for life and the premiums remain the same when purchased. So, regardless of changes in health or age your premiums won’t be affected and the cost of the policy will remain the same. A permanent life insurance policy can also help to cover any outstanding expenses that may be left, such as estate taxes or additional expenses that may put a strain on your family. Permanent life insurance offers you continuous peace of mind that your family will be financially protected.
For those of you that want a certain duration of time covered by life insurance, you can opt for term life insurance. This type of insurance will allow you to renew your insurance at the end of every term (10, 20, 25, 30 years or however long the term is outlined in the policy) up to a certain age and depending on the plan. Each time you renew the term of your policy, with age and health changes, your premiums will increase. If you decide to change your policy later in your life, depending on your age and plan, you can even convert your term coverage into permanent.
No medical life insurance
If you are afraid that your current health situation may not allow you to qualify for life insurance, you can opt for No Medical Life Insurance. There are both term and permanent versions of this type of life insurance. The benefit of this plan is that you won’t need to complete medical exams or tests (which means no drawing of fluids and no needles necessary).
As an older person, you will need enough coverage for your beneficiaries to pay for the expenses or outstanding debts that need to be paid when you pass away.
To determine this coverage, consider costs such as:
- Funeral and final expenses
- Income replacement
- Children/grandchildren education expenses
- Outstanding mortgage payments
- Outstanding personal debts
These are just a few thoughts to get you started, think about if there are other expenses or debts that don’t fall on this list, but that your beneficiaries could use to cover costs when you pass away. If you think you need more coverage, be sure to purchase a life insurance policy that reflects these needs and has a larger death benefit.
Use an insurance calculator to easily estimate the coverage, you may need.
Insurance providers will take your age into consideration when determining if you qualify for life insurance. Your insurance provider knows that the older you are, the more likely you are to pass away during the term of the insurance. As a result, there is a maximum age that you can qualify for life insurance. Keep in mind that your premiums will likely be lowest at the age you are at now. As you get older, your health outcomes may not be as good, so the earlier in your life you get life insurance the easier it is to qualify.
One of the factors that insurance providers consider when deciding on your plan and premiums is whether you’re a smoker. Since smoking is linked to many diseases and is proven to decrease life expectancy, they will likely want to know what your relationship is with smoking.8 Quitting smoking can add years to your life, so when it comes to qualifying for life insurance, older people can benefit from not being a current smoker or having a history of smoking.8
It can seem difficult to qualify for life insurance especially if you are older and have poor health. As we get older, illnesses creep up and our life insurance requirements may be affected. These days more seniors are living with chronic illnesses such as cancer and heart disease.9 As a result, it can be challenging for you to find appropriate life insurance for your needs. Some insurance providers may consider you as too much of a liability and won’t want to insure you.
If your family history has cases of illness and if over time your family members have poor health, this can also affect your chances of qualifying and can increase your premiums.
However, no medical life insurance can help you even if you have poor health to still qualify. The insurance provider may ask health related questions which must be accurately answered, but you won’t need to complete a medical exam (no drawing fluids or needles required) and can be done in the comfort of your home. This means seniors with health conditions are eligible to apply.
Seniors can benefit from life insurance in many ways. Keeping your loved ones protected with the right life insurance policy will give both you and your family peace of mind for the future.
- 1 https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1410006001
- 2 https://www.bnnbloomberg.ca/canada-s-actuaries-urge-governments-to-raise-retirement-age-1.1244550
- 3 https://www150.statcan.gc.ca/n1/pub/75-001-x/2011002/article/11428-eng.htm#a1
- 4 https://www.macleans.ca/education/the-cost-of-a-canadian-university-education-in-six-charts/
- 5 https://globalnews.ca/news/2924898/university-tuition-fees-rise-40-per-cent-in-a-decade/
- 6 https://www.mortgagebrokernews.ca/news/more-canadians-are-concerned-about-their-debt-obligations-321300.aspx
- 7 https://globalnews.ca/news/2139798/death-aint-cheap-a-look-at-funeral-costs-and-alternative-options/
- 8 https://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/effects_cig_smoking/index.htm
- 9 https://www150.statcan.gc.ca/n1/pub/11-631-x/11-631-x2016001-eng.htm