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Why Do People Over 50 Need Life Insurance?

Do Older People Need Life Insurance?

Do Older People Need Life Insurance?

Do you need to buy life over 50? Lots of people buy term policies when they are just starting out with a new house and a young family. It might seem prudent to be sure a home can get paid off and kids can have support in case something unexpected happens to a family’s breadwinners and caregivers. If this sounds like something you have done, you may be hitting your 50’s or 60’s with an expired term life insurance policy.



Now, in middle age, you may be wondering if you need life insurance as your kids are fairly well grown, your mortgage balance is small, and you have some savings. Of course, if those things do not describe your situation, you may very well find that you have some need of life insurance again. Of course, people buy coverage for lots of reasons. Some use their policies to help transfer wealth, protect a small business, or even just to make sure their family has cash to pay for a funeral. Your own unique needs, budget, and future plans will determine which is the best kind of life insurance for your needs.

People Over 50 Can Find Life Insurance

The good news is that many life insurance companies court the Baby Boomer and Senior market. This means you can even find term insurance companies that will offer to cover reasonably healthy people.

  • A 50 year old can probably find 20 year term, and a 70 year old can find 10 year term policies in many cases.
  • On the other hand, if you are tired of having your life insurance terminate after the term is up, you may want to consider permanent coverage like whole or universal life.

Permanent vs. Term Policies For Older People

  • Term is cheaper, but it does expire (typically with no cash value).
  • Whole and universal life can accumulate a cash value, and they never expire as long as they are kept in force (paid for or paid up).
  • Permanent policies can be used in senior life settlements that can help seniors sell their cash value policies for some amount that is closer to the face value than the cash value.

By now, it should be obvious that the right choice depends upon your needs. If you still have a few obligations that you need to get out of your way, like paying off a house or getting that last kid out of the house, term might be the best choice. If you need to transfer wealth or provide for funeral expenses, permanent policies could make more sense.


Can You Compromise Between Term and Permanent?

You might be able to pick up a term policy with an option to convert it to term without having to answer health questions again (evidence of insurability), and this can allow you to choose a cheaper plan today. Just be aware that your future whole or universal life premiums are likely to be higher when you are older.

You can also find a hybrid term policy with return of premium that actually refunds your premiums if you survive the policy. This can provide a way to get cash to fund a small burial policy in the future if you happen to need it.

Of course, you can always purchase a smaller whole or universal life policy, and then purchase a larger term policy. In general the cheaper premiums associated with temporary coverage allow people to buy larger face values. The right answer really depends upon your needs and budget.

One argument in favor of permanent policies is that you might be able to sell your policy for cash in a senior life settlement.

 

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  1. […] whole vs. universal life insurance. This discussion is mainly aimed at people who are considering life insurance over 50, but younger people could benefit from this topic […]

  2. […] You might find products called senior life or burial life that offer whole life policies with no medical exam. Some don’t even ask any health questions at all. Even though these might get referred to as senior life insurance plans, and some are restricted to people between 50 and 85, others are open to people between 0 and 85. Is this a good deal to get life insurance over age 50? […]

  3. […] In some cases, seniors may need more than $5,000 or even $25,000 worth of coverage, and these are the limits of typical burial life insurance policies.  There are bigger whole life and even term life insurance policies for senior citizens.  Baby Boomer Concerns already covered some of this on the article with the title of Life Insurance Over 50. […]

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