Policy Type
Start by choosing what type of life insurance policy you need. There are many options available, but initially, you’ll need to choose between two main types: term life or permanent life. Both policy types have pros and cons to consider.
Term Life Insurance for People Over 50
Term life insurance offers a locked in rate for a specific period, or “term,” typically between 10 and 30 years. If you pass away during the term, your beneficiaries receive the death benefit. If you outlive the term and don’t choose to renew, the policy expires with no payout. If you decide to renew, expect rates to increase significantly with each renewal.
Term life insurance generally has lower premiums than permanent life insurance, making it more affordable.
Permanent Life Insurance for People Over 50
Permanent life insurance (such as whole life insurance), on the other hand, provides lifelong coverage as long as the premiums are paid. If you pass away at any point while the policy is in force, your beneficiaries receive the death benefit.
Permanent life insurance also generally has a cash value component that grows over time. You can borrow against this cash value, withdraw from it or use it to help pay your premiums. Any outstanding loans from the cash value at your death will reduce the death benefit.
Policy Amount and Coverage
When shopping around for life insurance, you’ll also need to crunch some numbers and determine how much life insurance you need. You should also decide if you want add-on coverage through life insurance riders. These considerations will be based on a few factors, including:
- Debts and liabilities. You should have enough life insurance coverage to ensure your family isn’t financially burdened by debts, such as a mortgage, car loan, college tuition or credit card debt.
- End-of-life expenses. You’ll also need to consider costs associated with end-of-life care and funeral expenses and ensure you have enough coverage to prevent them from financially burdening your loved ones.
- Financial dependents. Consider who relies on you financially, such as a spouse, minor children, adult children with disabilities, or even aging parents.
- Income replacement. If you’re still working and there are people who depend on your income, it’s important to calculate how much money would be needed to replace your income and maintain your family’s current lifestyle.
- Long-term care. It’s becoming increasingly common for older adults to require long-term care, such as a nursing home or assisted living facility. Some life insurance policies offer riders that can help cover these costs.
Financial Stability
When comparing life insurance companies, financial strength and stability of the company is an important factor to consider. You want to make sure the company you choose will be around for the long term and can pay out a claim if necessary. You can check a company’s financial strength rating through independent rating agencies such as AM Best, Standard & Poor’s and Moody’s.
FAQs
Term Life Insurance for People Over 50
Term life insurance offers a locked in rate for a specific period, or “term,” typically between 10 and 30 years. If you pass away during the term, your beneficiaries receive the death benefit. If you outlive the term and don't choose to renew, the policy expires with no payout.
What type of life insurance is best to over 50? ›
Term Life Insurance for People Over 50
Term life insurance offers a locked in rate for a specific period, or “term,” typically between 10 and 30 years. If you pass away during the term, your beneficiaries receive the death benefit. If you outlive the term and don't choose to renew, the policy expires with no payout.
Is it worth getting life insurance at 55? ›
If you buy life insurance in your 50s, it does cost significantly more — there's no way around it, as you might discover when getting a life insurance quote. If you no longer have financial dependents and have enough savings to cover debts or final expenses, a term life insurance policy might be an unnecessary expense.
Is it too late to get life insurance at 50? ›
While life insurance coverage typically costs more as you age, you can still apply for a policy later in life to help protect loved ones from having to pay your obligations. A life insurance policy can also serve other estate planning and business protection purposes.
What does Dave Ramsey recommend for life insurance? ›
Core Ramsey Teaching: You only need life insurance while you have people depending on your income. Buy a 10–20-year term policy worth 10–12 times your annual income. Since life insurance is only for the short-term, you should only buy term life insurance. (Hence the name.)
At what age should you stop having life insurance? ›
At What Age Is Life Insurance No Longer Needed? Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they have retired, their kids have grown up, and they've paid off their mortgage and other debts.
How much does AARP life insurance cost? ›
How much is AARP life insurance per month? AARP life insurance can cost as little as $11 monthly or as high as $900. The final price depends on the type of policy (whole, term, or guaranteed acceptance), product, age, gender, state of residence, and health.
Is AARP life insurance legit? ›
AARP's life insurance policies are underwritten and managed by New York Life, one of the largest and most dependable life insurance companies in the U.S. It has an A++ (Superior) financial strength rating for life insurance companies from AM Best and gets very few complaints according to the National Association of ...
What is the cut-off age for life insurance? ›
Term life insurance typically has an age limit ranging from 75 to 86 years old, while whole life insurance, universal life insurance, and variable life insurance generally have no maximum age limit. Final expense insurance and guaranteed issue insurance typically have an age limit of around 85 years old.
At what age does life insurance get more expensive? ›
Young people tend to pay the lowest life insurance rates, whereas older people tend to pay the highest. Although there are exceptions — usually based on the health of the applicant — a 30-year-old will likely receive a lower premium quote than a 40-year-old.
It guarantees a lump-sum pay-out when you die (once you're past the required minimum period). Your monthly premiums are fixed. Peace of mind that your funeral expenses could be covered once you're gone.
How much is $100,000 in life insurance a month? ›
On average, a $100,000 whole life policy will cost between $100-$1000 monthly, depending on various factors such as your age. Life insurance pricing is based on your actual age, gender, lifestyle, health, tobacco usage, and coverage amount.
What is the best type of life insurance policy to have? ›
If you have many dependents, whole life insurance may be a better route. However, if financial planning and cash value are most important to you, universal life insurance may be a strong option. Lastly, if you are a business owner, group life insurance might be the best life insurance option.
What type of life insurance gives the greatest amount? ›
Term insurance is initially cheaper than other types of policies that offer the same amount of protection. Therefore, it gives you the greatest immediate coverage per dollar.
What is the most cost effective type of life insurance? ›
Term life insurance is the cheapest type of life insurance policy; the cost of whole life insurance can be significantly higher. With that in mind, here are some of the cheapest companies for a 20-year, $500,000 term life insurance policy covering super preferred applicants.
