Many view the procurement of life insurance as an activity one does earlier in life. While generally speaking the benefits of life insurance tend to be focused on those younger married couples with kids and large mortgages, that doesn’t mean that maintaining or acquiring life insurance later in life is a bad financial decision. That said, any decision where you lock up sums of money that can only be accessed on a future event, the date of which is unknown, has pros and cons.
It has been said that “life insurance is for the living” and frankly nothing can be truer. One can view life insurance as a means to meet your responsibilities and keep your promises. Owning life insurance is a tool whereby you do not protect yourself. Instead, you provide security to your spouse, children and even grandchildren by providing a safety net when you pass away
Of course, most folks that live until 50 have had some sort of health hiccup in their past. Whether it was a minor hernia or a cancer scare, having some sort of medical event in your past is completely normal. With this in mind, the decision on whether to pursue life insurance at a later stage in life will depend in many ways on your medical history.
A relatively healthy fifty or even sixty years old will often qualify for cost-efficient life insurance while a person in this same age range that has been treated for a significant ailment may not qualify or may qualify but the cost may not justify the coverage. When considering whether to buy life insurance, you should be aware of the two general types: term life insurance and whole life insurance. In most cases, a person over 50 should strongly consider proceeding with a term life policy.
A term life insurance policy in almost universally cheaper than a whole life policy set up for a fixed period, and serves a good safeguard for specific financial commitments (e.g., paying off the balance on a mortgage so your surviving spouse and beneficiary essentially inherit a home free and clear). While the benefit of a whole life insurance policy is that it doesn’t expire, the costs of acquiring the same at a later stage in life outweigh many of the benefits.
While many reasons exist, here are the most common reasons why a person over 50 may decide life insurance is the right decision:
1. Final expenses–
Nobody likes to think of their own death or the arrangements following the same but the truth is a funeral and related expenses can be quite expensive. Of course, medical and hospice costs during the final phases of one’s life can also add up. Having life insurance makes sure that the costs of the funeral (e.g., plot, headstone, flowers, casket, etc) don’t create an extra level of stress for your loved ones.
2. Estate taxes–
While it’s unclear what the future of the estate tax in the United States will be, as it currently stands, the tax can substantially impact what your loved ones inherit. While they say the only guarantees in life are death and taxes, life insurance can be utilized to mitigate to offset the cost of the later.
3. Lost income-
This is a tricky one. Often but not always, when a person dies, his or her retirement income (i.e, pension) goes away in whole or in part. In such a case, the result is you not only have a grieving spouse but you have a grieving spouse that has a cash flow problem.
We note the scenario, not as a scare tactic to encourage life insurance purchasing but instead to recommend you familiarize yourself with the terms of your retirement income and consider ways to minimize the impact on your loved ones in the event of your passing.
Conclusion on Life Insurance After 50:
In sum, it is important to know that getting life insurance after age 50 is possible and that if you are in average (or maybe even slightly below average) health, the financial upside of a term policy may outweigh the monthly and annual cost.
Balancing the demands of your needs today with those of your loved ones if you pass away early is by definition a difficult task but it’s an endeavor we believe worthwhile.