Unique Challenges for Individuals Over 50 Buying Life Insurance
Over 50 life insurance is different.
The industry is changing. No longer is term life the only policy for people to get life insurance on their early or midlife policy.
When you’re young, term life insurance is inexpensive. However, as you get older and closer to retirement age, the premiums also increase.
Typically between the ages of 50 and 61 you’re not going to be able to get the same type of term life. You have to look at whole life, universal life, or variable. Just know that it’s going to be a bit more, especially as far as term life goes.
If you’re over 50 and have anything that looks like term life insurance in your policy, here’s what you want to do: Call your insurance company and ask them to send you a new quote. Don’t assume it’s going to be the same, because I guarantee it’s not.
As you get older, your premiums are going to go up. Your health is more important than it ever was— and that’s where the insurance companies make their money. They’re betting you’re going to die.
How and Where to Find a Life Insurance Policy if You’re Over the Age of 50
The life insurance market has changed in recent years. Gone are the days when you would turn to an agent to buy a policy. Today, more and more people are turning to the internet to shop for home insurance.
And this is a trend that is only going to continue. More and more people of all ages expect to be able to access information and buy products online. Young people who were brought up with the internet make up a large chunk of the demographic that is currently underserved by the life insurance industry. This will ultimately lead to a shift in the way people buy life insurance.
It’s no surprise then that the life insurance industry has recognized the need to embrace change and adapt. More companies are getting online while existing insurance providers are revamping their online presence to reach out to the growing number of online shoppers.
Here are a few ways to get started with your search:
Stay up to date on insurance news to learn about how companies are responding to changing times.
Browse a few company websites. Some electronic insurance companies are excellent at drawing you in with their website.
Look at insurance comparison websites.
Check out insurance forums to read about other people’s experiences.
Ask your peers and family members about their experiences with buying life insurance.
Any one of the above will help you get started on your search.
Do People Over the Age of 50 Still Need Life Insurance?
If you have a spouse or children and you want to secure your family’s finances after your death or for them in case of a long-term illness, an insurance policy is a necessity.
When you are healthy and middle-aged, the issue of life insurance often is not on your radar screen. But it should be. In fact, you should have life insurance at that point, too. At that point, you are at the peak of your earning years and likely to have a mortgage or other significant debts.
If there are no adults in your household, you might not be paying as much attention to life insurance, but the need is still there. In that case, you need to make sure that the right kinds of trusts have been set up so that your children or family members will be provided for.
Which Type of Life Insurance is Best if You’re Over the Age of 50?
If you’re looking to supplement or replace existing life insurance, here are a couple of basic questions you need to ask yourself.
Term Life Insurance
A term life insurance policy is designed for a specified period of time – such as five, ten, or twenty years. The premium (the amount that you pay each month) is based on your age and health.
Once you pass that period of time (i.e. you turn age fifty-one), you can renew your policy by paying the increased premium based on your age at that point. You can also continue renewing your policy, but the premium will keep increasing each time. That’s why it’s better to buy a term policy for the maximum number of years allowed and then take care of other life insurance risks with other kinds of policies, like universal life.
Permanent Life Insurance
Vs. Whole Life Insurance
When I was in my early twenties, insurance salesmen were everywhere.
They were promoting life insurance, health insurance, disability insurance, and whatever else they could dream up. The salesmen were eager to tell me all of the ways my life would be ruined should I be unfortunate enough to have an accident or get cancer. I recall one salesman in particular concocting the most horrible scenarios to convince me to purchase his brand of life insurance. Since the salesman had just returned from a funeral, I put much weight on his recommendation. But, his sales strategy turned me off from insurance shopping for the next decade or so.
This was before I turned consumer advocate and smart money expert. When I became a smart money expert, I figured I would give insurance a good look before making any decisions. I learned that life insurance is like any other form of insurance. When you know what you’re buying, insurance is a prudent investment that can help you meet your future financial needs.
Here are the terms you need to know.
Permanent life insurance. A permanent life insurance policy is an insurance product, like a whole life, universal life and variable life, that will keep paying out as long as you are alive. It is generally an investment option.
Life Insurance with No Medical Exam
Looking for life insurance after age 50 can be challenging, especially in the individual market. One of the main reasons is that life insurance companies in this segment favor younger individuals who are more likely to have a longer life expectancy. Also, policies bought by older individuals are more costly because they are a greater risk.
There are a few different types of life insurance for older individuals that you can look into:
Term life insurance
This is the most common type of life insurance. The premiums are fairly low, and the rates do not increase as you age. However, the coverage period is limited – typically to a maximum of 10 or 20 years. Also, term life insurance does not cover beneficiaries after the policy expires. And finally, it does not cover any type of funeral expenses.
This type of life insurance is in between term life and permanent life insurance. Whole life insurance offers coverage over an unlimited period of time. However, some whole life insurance products may not offer any benefit after the initial period and you will be required to open a new policy.
This type of life insurance offers you some control over the premium payments. It works a lot like a savings account to which you add money that is invested in a portfolio similar to an investment mutual fund.
The Bottom Line
Where to Begin
Life insurance over 50 is often rather expensive. That being said, the rates for 50-year-olds are still much lower than that of a 25-year-old.
It is necessary for everyone to carry life insurance. However, many people put off purchasing policies. Life insurance is just too expensive for them, or they don’t have the wherewithal to put together a life insurance package.
What many people don’t know is that there are several different kinds of life insurance, and each of them plays an important role in providing stability for your loved ones if you pass away.
Alternatively, premiums are generally cheaper as you get older, so that is another factor to consider. But, of course, your state of health will be a factor so be prepared to jump through hoops and submit multiple medical forms as you age.
Life insurance is very important for many because it allows you to prepare for your family’s financial future when you are no longer able to contribute.
It’s a safety net that will provide your family with the funds they would need to pay for the college education of your children, a comfortable home, and even a few luxuries.