There are many things to look forward to in your 50s – taking a bucket list trip with your spouse, trying your hand at a new career (because you have the flexibility to do so), and enjoying the fruits of your labor from the first half-century of your life.
Overall, it’s a time to bask in the financial security you’ve been working to create over the years and ensuring you’re on the right path for retirement.
When it comes to smart financial planning in your 50s, does life insurance have a rightful place in the mix?
Buying life insurance in your 50s does cost significantly more – there’s no way around it. 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.
But, if you find yourself in your 50s with people who rely on your income to survive, then buying more coverage might be the right move for you.
When Life Insurance in Your 50s Makes Sense
Real life does not happen on a set schedule.
Not everyone starts a family in their 20s and is approaching empty nest status by age 50. Not everyone has sufficient money saved for the unexpected or retirement.
The average age of first-time mothers has been increasing steadily since the 1970s, and, the average American has less than $1,000 in savings. These trends indicate that there are more and more people in their 50s with young, financially dependent children. And, many of them don’t have enough money to financially support their families during an unexpected illness, layoff, or, the loss of a spouse.
Even if you don’t have children (or financially dependent children), life may have taken unexpected turns – it has a habit of doing that, after all. Perhaps it is taking longer to pay off the mortgage, or a financially dependent spouse needs a safety net until he or she makes it to retirement age. Regardless of what it is, it’s important that you figure out your life insurance needs.
If any of the scenarios above resonate with you, then buying life insurance may be a smart decision that could provide you with much-needed peace of mind.
Best Life Insurance Options for 50-year-olds
When you’re older, a new life insurance policy costs more. That’s just the way policies work. So if you’re searching for the kind of peace of mind life insurance can provide, it’s important to consider your coverage needs carefully, making sure you’re getting the policy that’s just right for your family and that you’re also not overpaying for coverage.
Term Life vs. Whole Life Insurance
This is an age-old debate with advocates for both sides. Here’s the basic run-down of the differences between term life insurance and permanent life insurance:
A term policy, as the name entails, provides coverage for a set period – usually 10, 15, 20 or 30 years. Its purpose is to help financially protect your family during the years they need it most. If you were to die during the length of the term, your beneficiary would receive the policy’s coverage amount. When the coverage term length ends, you can choose to renew it, but since your rates will be based on your age and health at the end of the term, the premium will cost significantly more. Ideally, you wouldn’t need to renew it because over the years you have created an adequate financial cushion and no longer have dependents (like young children) who rely on you to support them.
A whole or permanent policy lasts throughout your life, and it offers a cash value component that has the potential to grow over time. A whole life policy costs significantly more per month – anywhere from 5 to 20 times as much as a term policy – but the coverage doesn’t end. Because of the complexity of whole policies, buyers should work with a financial professional to buy and maintain a policy.
In your 50s, term life insurance coverage is going to be, by far, your more affordable option. For example, a 20-year, $250,000 Haven Term policy would start out at about $50 per month for a very healthy 52-year-old man. For many, that would be ample time for children to reach adulthood or a spouse to reach retirement age. A $250,000 whole life insurance policy, which is coverage that would last a lifetime, for that same man would start at about $580 per month, according to State Farm’s website.
Choosing the Right Policy and Term Length
Most people in their 50s opt for 10-, 15- or 20-year term policies. Typically, a 30-year term length is not offered to individuals in their 50s or it can be prohibitively more expensive.
As previously noted, a 15-year, $250,000 policy would start out at about $38 per month for a healthy 52-year-old man. That price would increase to about $50 per month with a 20-year term length.
Because premiums are more expensive in your 50s, it’s even more important to ensure you’re getting exactly the right amount of coverage. Too little can leave you wishing you had purchased more. Too much coverage can mean you’re overpaying with money that could be better put to use in preparing for retirement or building an emergency fund. A life insurance calculator can help you determine how much coverage is needed for your family. It’ll even help you estimate the cost.
Buying a Policy Online
Buying high-quality life insurance coverage is easier than ever thanks to modern technology. You can calculate your needs, get a cost estimate, apply online and get an immediate decision on coverage eligibility. No more waiting several weeks for a decision.
With an online-centered approach to life insurance, algorithmic underwriting is typically used to speed up the decision making process. A positive benefit here (besides saving you time) is that in some cases, a medical exam will not be required to finalize coverage. In the event you did need to complete an exam, usually, you either go to a paramed facility or have them come to you. The cost of the exam is covered by the insurer. In many cases, you’ll have temporary life insurance coverage to hold you over until the exam is completed and policy is in force.
When You May Not Need Life Insurance in Your 50s
Simple economics says you shouldn’t pay for something you don’t need. It doesn’t matter if you’re talking about cell phone data, cable channels or, yes, life insurance.
If your mortgage is paid off, your kids are out of college, and you and your spouse have a financial nest egg for retirement and emergencies, then life insurance may be an unnecessary expense. Generally, you should have the resources to replace 5 to 10 times your annual income. And, that shouldn’t clear out your assets. If your partner doesn’t work, you’d want to make sure they could comfortably retire and more without your income. It’s always a good idea to check first with a financial planner before making this decision, especially if you’re counting on assets you’ve accumulated over the years to provide a source of income for you and your spouse.
Building a Safety Net for Your Family at Any Life Stage
When you’re young and just starting a family, life insurance is often a no-brainer. Twenty and 30-year- olds usually have young families to provide for and get the best rates out there.
With age comes more complexity around your life insurance needs. And, in your 50s, a new life insurance policy may not be the best strategy to protect the people you love financially – rates are higher, and you may have other financial assets such as property, investments, and savings, which can be utilized. A financial planner can help sort things out if you’re not sure.
But the world is constantly changing, and not all paths to financial security travel the same route. If you’re in your 50s and are concerned that your partner or children will face financial uncertainty if they lost you unexpectedly, it’s not too late to get quality life insurance coverage at a manageable price. If you know you need coverage, you can start the process for you and your family by getting a free quote.
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Haven Term is a Term Life Insurance Policy (ICC15DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Our Agency license number in California is 0K71922 and in Arkansas, 100139527.