Life insurance for people over 50

Do people over 50 need life insurance?

If others rely on you financially, life insurance can be a vital component to ensuring their future security. For those over 50, this consideration becomes even more relevant as your financial landscape and responsibilities shift. Here’s why life insurance might be a valuable addition to your financial plan:

• Covering final expenses: One significant reason to consider life insurance is to manage the high costs of final expenses. Funerals and related services can average between $13,220 and $37,320, covering everything from the casket to the cemetery plot. A life insurance policy can ease the financial burden on your loved ones by covering these costs, ensuring they don’t have to bear this expense during an already challenging time.
• Supporting dependents: If you have a spouse, children or other dependents who rely on your income, life insurance can help maintain their financial stability if you’re no longer there. It can help cover outstanding debts like a mortgage, provide ongoing support and help your dependents continue their lives with fewer financial worries.
• Funding future goals: Beyond immediate needs, life insurance can also support longer-term goals. Whether it’s funding education for grandchildren, leaving a legacy to heirs or making a charitable donation, life insurance provides a way to achieve these objectives even after you’re gone.

When considering life insurance, there are a few policy types you can choose from:

• Term life insurance: If your financial obligations are expected to diminish over time, such as when your children become self-sufficient or your mortgage is paid off, term life insurance can be a practical option. It offers coverage for a specified period, typically 10, 20 or 30 years, making it a cost-effective solution for meeting temporary needs.
• Permanent life insurance: This type of policy might be more suitable for those with ongoing financial commitments, such as spousal support or estate planning. It provides lifelong coverage (95 - 121 years of age) and includes a cash value component that grows over time, offering a stable financial foundation for long-term needs. There are various forms of permanent life insurance, each with different features and complexities. Working with an experienced life insurance agent can help you determine if you need permanent insurance and which type would be best to meet your needs.

However, life insurance may not be necessary for everyone. If you have significant health issues or find the cost of coverage high relative to your budget, it might not be the most practical choice. In such cases, final expense insurance, specifically designed to cover end-of-life costs, could be a more fitting alternative.

Best life insurance companies for people over 50

As you hit or pass the age of 50, it can be a good time to look at your life insurance options and see what might fit your needs. If you’re starting to consider life insurance or thinking about updating your current policy, you might find that different types of coverage suit you better now. For example, if you’re worried about the limitations of a term life policy, switching to a final expense whole life plan could offer you peace of mind with coverage that doesn’t have age-related restrictions and helps with end-of-life expenses.

Shopping around for life insurance quotes over 50 can be a smart move because each company evaluates risk differently. Comparing quotes from various providers can help you find the best rates and coverage for your situation. To make this easier, Bankrate’s team has reviewed several insurance companies based on their reliability, policy options and customer satisfaction, so you can start your search by reviewing some of the best life insurance companies.

How to choose the best life insurance for people over 50

Whether you are shopping for your first life insurance policy or thinking about making some refinements to your existing coverage, there are a few key factors to consider if you are aged 50 or older.

Policy type

When searching for the best over 50 life insurance policies, it's helpful to first evaluate your specific needs, budget and health. Understanding these factors can help you determine which type of policy aligns with your goals.

• Why your needs matter: Identifying why you need life insurance — whether to provide for loved ones, cover final expenses or leave a legacy — will guide you in selecting the right policy. For instance, if you need coverage to last throughout your lifetime and can afford higher premiums, permanent insurance might be suitable. Conversely, if you only have 10 more years to pay off your mortgage, a term policy may be a better fit.
• Budget considerations: Your budget also plays a significant role. Typically, longer-term policies and permanent coverage options are more expensive. For example, a 30-year term policy will usually cost more than a 10-year term policy. Permanent insurance is generally pricier than term insurance but designed to offer lifelong coverage — usually up to an age range of 95 to 121 years.
• Health factors: Your health is another crucial aspect. If you have health concerns, some policies, especially those with flexible underwriting like simplified issue or guaranteed issue options, may be available. However, these options can come with higher premiums or limited coverage amounts compared to traditional policies.

If permanent policies intrigue you for their extended coverage periods, here are some common permanent life insurance products you will come across:

• Whole life insurance: Provides lifelong coverage with fixed premiums and a guaranteed death benefit. This policy also accumulates cash value over time.
• Universal life insurance: Offers flexible premiums and death benefits, with a cash value component that earns interest. It allows for adjustments in the coverage amount and premium payments.
• Variable universal life insurance: Combines flexible premiums and adjustable death benefits with an investment component. The cash value can be invested in various sub-accounts, which can potentially grow faster but also come with higher risks.
• Indexed universal life insurance: Features a flexible premium structure with a cash value linked to a stock market index. It offers the potential for higher returns compared to traditional universal life policies, though it also has some risks.

Death benefit

When choosing a life insurance policy, the amount of the death benefit you select is a key consideration. This benefit is the sum of money your beneficiaries will receive upon your passing. Depending on your needs and goals, you might choose a policy that covers only immediate expenses, like funeral costs, or one that provides a more substantial payout to cover things like paying off a mortgage, funding a child’s or grandchild’s education or leaving a legacy.

It's also important to recognize that policies with higher death benefits generally come with higher premiums. If you choose a substantial death benefit to ensure your loved ones are well-provided for, be prepared for potentially higher premiums.

For permanent life insurance options, like whole life or universal life policies, there’s an additional feature to consider: the cash value. With these types of policies, part of the money you pay in premiums builds up as cash value over time. This cash value can be accessed during your lifetime, typically through loans or withdrawals (depending on the type of policy). Keep in mind that any amount borrowed or withdrawn will reduce the death benefit your beneficiaries receive. Unlike traditional loans, life insurance loans don’t need to be repaid by a set deadline, giving you flexibility but potentially impacting the overall payout. Like other loans, life insurance loans do incur interest.

Rider options

When evaluating life insurance policies, it's worth exploring rider options. A rider is an additional provision or feature that you can attach to your policy to customize coverage to better meet your specific needs. Riders can enhance your policy by providing extra benefits or adjusting terms based on your personal circumstances.

For individuals aged 50 and over, here are some riders that might be worth considering:

• Long-term care rider: This rider can be a valuable addition if you don’t already have long-term care insurance. It helps cover expenses related to long-term care services, which can be beneficial as you age.
• Disability waiver of premium rider: If you become disabled and are unable to work, this rider waives your policy premiums while you’re disabled. Note that many disability riders expire around age 65 or retirement, so it’s important to check the terms.
• Accelerated death benefit rider: Allows you to access a portion of your death benefit if diagnosed with a terminal illness, providing financial support during challenging times.
• Chronic illness rider: Provides access to your death benefit if you’re diagnosed with a chronic illness that affects your ability to perform daily activities, offering additional financial flexibility.

Considering insurers that offer a broad range of rider options can be beneficial, as it allows you to tailor your coverage more precisely to your needs and future plans. This flexibility can help ensure that your policy remains relevant and supportive throughout different stages of your life.

Customer service

Before purchasing a life insurance policy, you may want to research a company’s customer service reviews. There may be a point where you need to ask a question or make a change to your policy, so you likely want to work with a company that is known for taking care of its customers.

Usually, you can research customer satisfaction reviews directly through a company’s website. Third-party rankings, such as those provided by J.D. Power, may also be helpful to your search. Additionally, you may want to consider a company’s online and digital tools. If you prefer to handle your policy service electronically, a company with an online customer portal or mobile app may be a good choice. Research how easy it is to contact your company with a question, whether via a 24-7 chat representative, email or phone call.

Financial stability

Financial strength ratings are an indication of a company’s history of being able to meet its financial obligations and pay claims that policyholders and their beneficiaries file. A poor financial strength rating could mean that a company might not have the financial viability to pay death benefits to its policyholders, depending on the number of claims being filed simultaneously. To find out if your selected life insurance company has a solid financial strength rating, you can review the rating via AM Best’s website. If the carrier has a score of A (Excellent) or higher, the company is more likely to be financially strong now and in the future. Your insurance agent should be able to provide you with detailed AM Best rating reports about the life insurers you are considering.

Why is life insurance more expensive for people over 50?

Age and health are key factors in determining the cost of life insurance. As you get older, life insurance generally becomes more expensive. This is because insurers use actuarial data — statistical predictions about the likelihood of death at various ages — to set premiums. Since older individuals statistically have a higher risk of passing away, insurers need to charge more to offset this risk.

Health is another critical factor. Many life insurance policies require a medical exam or a detailed health questionnaire. If you have preexisting conditions or take certain medications, you can appear as a higher risk to insurers, leading to higher premiums. On the flip side, managing your health proactively can sometimes help lower these risks and possibly reduce your insurance costs.

It’s no secret that our health often declines as we age, which can be a double-edged sword in terms of how much life insurance will cost later in life. However, understanding these factors can help you make informed decisions about your policy and potentially find ways to manage or reduce your insurance expenses as you age.

Frequently asked questions