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BLOG 03/08/2019

Guide to life insurance over 50

For many of us, getting married, buying a house, or having a baby is the reason we get life insurance. But what happens decades later when that baby is all grown up and the mortgage is (hooray!) finally paid off?

As the years bring new changes, your life insurance needs to change, too. If you’re entering your golden years, you may wonder how old is too old for life insurance or whether you even qualify. Here’s a closer look at who needs life insurance over 50 and how to find the best life insurance policy for you.

Do you need life insurance over 50?

Life insurance is designed to protect people who might suffer financially if you die. The need for life insurance is less about age and more about circumstances. While some empty nesters might think they no longer need life insurance because their kids are out of the house, it’s important to consider all your other financial obligations.

You may still need over 50 life insurance if:

  • You’re supporting other people. There’s a reason they call it the “Sandwich generation.” Many people in their 50s find themselves caring for aging parents, along with their own kids. About 24% of people aged 55 to 64 and 21% of people aged 45 to 54 are caring for a parent, often while they still have children depending on them – or even grandchildren, in some cases. At least 2.7 million older Americans are also caring for a grandchild, creating additional expenses that can last for years. If you have people from both generations depending on you, life insurance can help cover their expenses and pay for the care they need if something happened to you.
  • You’re paying college tuition or other big expenses for your kids. The average cost of attendance for a student attending a public, in-state college is nearly $26,000 a year, and those costs are even higher for private schools. Whether your child is planning to go in a few years or you’re already paying tuition bills, it’s a big expense that your paycheck is likely helping to cover. Life insurance can make sure their future plans don’t get derailed if the worst happens.
  • You still have a mortgage payment or other unpaid debts. Debt is growing for adults over 50, and people are carrying mortgages much longer. About 46% of people aged 65 to 79 still have a mortgage. Many more also have student loans, with 9.6% of adults 50 or older holding student loan debt. Since 2004, student loan debt has grown faster among those 60 and older than any other age group. Life insurance can help make sure those debts don’t fall on a spouse or family member, and that a death doesn’t mean losing the family home.
  • You want to make sure your spouse has enough to live on. Whether you’re still working or already retired, you want to make sure your spouse is comfortable if you’re no longer there. The average amount of retirement savings was $65,000 in 2019, and 40% of Americans are afraid they won’t be able to retire because of pandemic-related financial setbacks. Life insurance can help supplement an IRA, pension, or Social Security benefits, so your partner has a financial cushion to enjoy their last years.
  • You want to set aside money for end-of-life expenses, like a funeral or medical bills. The average cost of a funeral with a burial is more than $9,000 today. It’s an expense not everyone thinks about, but it is important to consider. Medical bills or nursing care can push the total even higher, and life insurance provides your family with a way to cover those costs.

Life insurance for people over 50 can provide a financial safety net to help your family pay for expenses like these and maintain their lifestyle after you’re gone. Especially if most of your money is tied up in your house or an investment account, life insurance typically offers a fast payout, without the hassles of selling a home or liquidating an account. For some people, life insurance is also a way to leave something extra for their kids or to a favorite charity.

When does it make sense to buy life insurance over 50?

Not everyone over 50 needs a life insurance policy. If you are debt-free, have savings for funeral expenses, and have alternate plans to leave a legacy and financial support for loved ones, you might not need one. However, if you fall into any of the below circumstances, life insurance may be a smart move.

  • If you still have big financial responsibilities. For people who still have children or other dependents they’re supporting, a traditional life insurance policy is the way to go. Term life insurance policies are the most affordable option and typically start at $50,000, so you can purchase enough coverage to provide real protection after you’re gone. Another option is permanent life insurance, which includes whole and universal insurance options and builds cash value over time. Permanent life insurance is more expensive than term life but may be a good fit if you have lifelong financial needs, such as a disabled child or spouse. As long as you’re in good health, you should be able to find relatively affordable rates if you apply for a new policy or reapply after your current one expires. With many carriers, you can apply up to age 70, although you may not qualify for as much coverage.
  • If you have health issues. Say your life insurance policy is coming to an end, but you’ve developed diabetes or another medical condition in the last few years. A simplified issue or guaranteed issue policy lets you skip a full medical exam and still get coverage. Guaranteed issue insurance is best for people with serious health concerns, while simplified issue is a more affordable alternative for people in relatively good health. Another option? If you have a term life policy with a few years left on it, some companies will let you convert all or part of it to a permanent policy. The company is guaranteed to approve you and will base the rates on your health when you bought the original policy, not your current health, although they’ll take your current age into account. This can get a little complicated, so talk to an agent about the best option for you.
  • If you just need enough to cover end-of-life expenses. You may no longer need a lot of life insurance, but there’s still one expense there’s no getting around: your funeral. Final expense insurance, or burial insurance, lets you earmark money for those costs. Policies usually top out at $35,000, so they’re not a good replacement for traditional life insurance, but they can help your family pay for a funeral service, burial or cremation, medical bills, or related expenses. Final expense insurance is relatively affordable, since the coverage amounts are small, and many carriers will let you buy coverage up to age 85. Before you shop, consider what kind of funeral you want and how much it will cost. Our final expense checklist can help you create a personalized plan based on your wishes and budget.

What type of life insurance policy is best for people over 50?

When you buy a policy, one of the biggest decisions you’ll make is the type of life insurance. Life insurance comes in two basic varieties: term and permanent. Whole life insurance is a common type of permanent insurance and often what you’ll find when you shop. Let’s explore the differences.

Term life insurance

Term life insurance lasts for a certain period of time, typically 10 to 30 years. If you’re in your 50s or older, you might find shorter term lengths available. Term life offers a death benefit if you die during the term. If you don’t, the policy ends and you can renew, buy a different policy, or let it expire. Term life is the most affordable coverage, since it just offers death benefit protection.

Whole life insurance

Whole life is a type of permanent insurance, which means it never expires as long as you keep up with payments. It also builds cash value, which is like a savings account you can borrow from while you’re still living to pay for anything you choose.

Final expense life insurance

Final expense is a type of whole life insurance policy that’s specifically designed to cover funeral or burial expenses. These policies have lower coverage amounts, from $5,000 – $35,000, making them a more affordable option that is easier to qualify for.

What to consider when buying life insurance over 50

Here are some factors to consider as you decide which type of life insurance policy to buy:

  • What’s your budget? Term life insurance is much less expensive than whole life insurance, since the life insurance just offers protection for a certain length of time. If you know you just need coverage for a few more years, like while you’re finishing paying off the house or putting kids through college, term life insurance can offer protection you need at a lower cost than whole life.
  • How old are you? In your 50s, both term and whole life insurance options are still widely available. As you get older, though, options will change. Many term life plans are available until age 70. As you approach that age, you might find that you qualify for less coverage or need to complete extra medical requirements, like an EKG. In your 70s, whole life insurance is typically the main option available, often through a final expense plan. You can buy permanent life insurance up to age 85, and there’s no medical exam required.
  • Do you need a guaranteed payout? Term life is the best for financial needs with a deadline. Consider why you’re buying and how long you need it to last. If you’re buying for needs that don’t expire, like funeral costs, whole life or final expense insurance is the way to go.

Why is life insurance over 50 more expensive?

For nearly every type of life insurance, you’ll pay the lowest premiums when you buy a policy at a young age. There are several reasons why life insurance often costs more over 50, including:

  • Health: The older you are, the more likely you are to have health issues that would impact your insurability. When you apply for a policy, you’ll answer a series of health questions that will help the insurer determine eligibility for a policy.
  • Age: The policies you may qualify for will change as you get older, and certain options may no longer be available based on your age and other factors. That’s why, as you get older, it’s more important to compare life insurance quotes to find the best rates.
  • Policy length: The older you get, the more risk falls to your insurer if you purchase a longer-term policy. For example, if you buy a 30-year term at age 25, the policy term expires when you’re 55. However, if you get the same 30-year term policy when you’re 50, the policy term doesn’t expire until you turn 80. As you can imagine, it’s much riskier to insure someone up to age 80 than it is to 55, so you’ll end up paying more in premiums as a result. Though, if you opt for a shorter 10- or 20-year term over 50, the rates will likely be more affordable.

Don’t delay getting life insurance quotes over 50

As you reach your 50s and beyond, you’ve likely checked a lot of milestones off your list. But you still have plenty of living left to do, and you want to make sure you and your family are protected in the meantime.

Planning for your life insurance needs now will save you money and worries down the road. Life insurance gets more expensive as you get older, and your health can also change at any time and cause prices to jump. That said, there’s a policy out there for almost everyone, even if you think you’ve aged out of life insurance. Term life can provide affordable protection up to age 70, and final expense insurance is typically available well into your 80s. Discover available policies and get a life insurance quote today with eFinancial.