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Over 50 Life Insurance: How to Get Affordable Life Insurance Even if You’re Over the Hill

Posted In: Age Considerations, Over 50
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Whether you’re a 50 year old man or a 50 year old woman—getting life insurance in your 50’s is a challenging proposition. If you’re considering purchasing your first policy or if your term insurance policy is coming to an end we’ll help you sort out all of your options for getting life insurance in your 50s.

In this article we’ll cover:

  1. Why you should consider getting life insurance in your 50s.
  2. The best life insurance rates for people over age 50.
  3. The best life insurance companies for people over age 50.
  4. The best life insurance policies for people over age 50.
  5. How to get life life insurance if you’re in your 50s.

8 Reasons People in Their 50s Get Life Insurance

If you’ve been paying your life insurance for the last twenty-five or thirty years and are excited about the thought of not having to write those life insurance payment checks anymore, we understand. But that doesn’t mean that you shouldn’t educate yourself on the various life insurance options available to people in their 50s. Life insurance is a dynamic financial product that can be used not only to transfer risk but also as an investment vehicle. In this article we’ll show you how.

To get started, here’s 8 quick reasons many people purchase life insurance in their 50s.

  1. Life expectancies are much longer than they were 50 years ago
  2. Pensions are not as common as they used to be and inflation and the rising cost of living is eroding their value
  3. Death benefits provide a financial parachute that helps with the cost of burials and funerals.
  4. Your children got a late state and aren’t yet self-sufficient
  5. You’re still married and don’t want your spouse to have to suffer under financial stress if you suddenly die.
  6. You’ve co-signed several loans for your children—most likely student loans.
  7. Competition and increases in average life expectancy are driving the overall costs of life insurance down–even for people age 50 and older.
  8. You were recently divorced and have to pay alimony or child support. In this case the family court may order you to secure a life insurance policy to protect dependents.

Sometimes it Doesn’t Make Sense to Get Life Insurance if You’re Over Age 50

We’re not here to sell you something you don’t need. We’ve helped over 100,000 clients choose the right life insurance so we’re perfectly comfortable saying not everyone needs a policy after age 50.

In some cases life insurance isn’t the right product for people in their 50s. If you don’t have any children or a spouse, don’t own a business, and don’t have any debt it’s unlikely you’ll need a term life insurance policy. However—some seniors in this situation purchase life insurance with the intention of giving the policy’s death benefit to charity, or as a way to diversity their investment portfolio. We’ll cover all of those scenarios later in this article.

I’m 50 Years Old, My Mortgage is Paid Off and My Kids Are on Their Own

Since the coming of age of millennials, up to 25% of children still live at home with their parents at age 30. Many people think that because they’ve reached the golden years they can allow their life insurance policies to lapse or expire. And, if you don’t have a mortgage and your kids are financial sufficient you could be right. In that case we suggest taking a look at the 8 reasons to get life insurance in your 50s mentioned above and see if you fall into any of the scenarios—if not continue reading because you might find another use for life insurance that you didn’t know about.

Term Insurance or Permanent Insurance, What’s Better For People Over Age 50?

We’ve written in depth articles on the difference between term and permanent insurance in the past. Now we’ll discuss the relevant issues for anyone in their 50s looking to purchase term life insurance or permanent life insurance.

The Case for Term Life Insurance Over Age 50

Term life insurance is going to be your cheapest option if you are 50 years old or older. If you have outstanding debt, are the co-signer on a student loan or other type of loan, or own a business you may want to consider term life insurance. Some other reasons people secure term life insurance include:

  1. Mandatory term life insurance required by a court as part of a divorce settlement.
  2. Purchasing term life insurance to protect your pension income and reduce risk for your spouse.

The Case for Permanent Insurance

Permanent insurance lasts until you die. That’s appealing to some folks who want to offset the risk of living beyond the policy period of their term life insurance.

Not to mention the benefit of accruing cash value—which is appealing to risk-averse investors who don’t have time to recover investment losses in the event of a stock market crash.

Diversification is another reason some investors go the permanent insurance route. Many financial advisors believe that life insurance can be a good addition to your retirement portfolio and de-risk a small portion of your total assets. While the stock market suffers from volatile ups and downs of the market, your whole life insurance policy will accrue cash value and earn a modest interest rate.

Line of Credit. Permanent insurance can also substitute as a good line of credit. You can borrow up to your total premiums paid. So if you have a cash value of $100,000 in your life insurance policy you can access that money if you need it.

Borrowing against your own life insurance policy has several advantages compared to a home equity line of credit or other traditional avenues. First, there’s no repayment schedule and no credit checks. The interest rate isn’t determined by your credit score or personal credit history—and borrowing the money is not a taxable event. The downside? The loans accrue interest and your unpaid principal and accrued interest are deducted from the death benefits paid to your policy beneficiary. But hey, it still beats going to a banker with your hands out.

A Lifetime of Protection. Permanent insurance never expires (as long as you pay the premium). That means your family or business are protected until you die. And, in the event of your untimely death, the beneficiary receives a tax-free death benefit that can be used to pay funeral costs, pay of mortgages and debts or pay inheritance taxes on your estate.

Term Insurance Conversions. Many people who purchased term life insurance will see their policy expire in their 50s. Some of these policyholders will be interested in taking advantage of the term life conversion option—if their policy offers it.

Most term insurance policies are convertible. A term conversion is an option that allows policyholders to convert their term life policy to a permanent policy without a medical exam.

One reason this option is popular is because there’s usually no requirement for a medical exam and many policies allow you to convert your policy at the original health classification. This can be a big win for people who’ve contracted a chronic disease like diabetes in the twenty or thirty years since they purchased their term life insurance.

Take John for example. John purchased a twenty-five year term life insurance policy at age 30 when he bought his first house and started having children. John’s term policy expired when he turned age 55—but his mortgage still wasn’t paid off and he owned a small business. John was able to convert his term life insurance policy to permanent insurance and continue the protection his family and business needed.

4 Steps to Take to Get a Favorable Rate in Your 50s

  1. Get started right now. The longer you wait the more expensive your life insurance policy will be.
  2. Be smart about who you purchase insurance from. Not all insurance agents are the same. You need to ensure you shop with an agent that has access to life insurance companies that write policies for older individuals.
  3. Choose a life insurance company that specializes in writing insurance for older individuals. Remember there’s over 700 life insurance companies in the United States and each one is looking for a different type of customer.
  4. Get healthy. Do you best to prepare your body for the life insurance medical exam. We’ve written a few tips that you can take immediate action on that will save you thousands of dollars on your life insurance—just by focusing on your health for a few months before you secure your policy.