How Much Life Insurance Do I Need in My 50s?
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If you’re in your 50s, you might wonder whether getting life insurance at this stage in life is worth it. As with any decision related to personal finance, it depends. However, several reasons exist to consider purchasing life insurance at this stage. In this guide, we take a look at them in detail.
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What is life insurance?
Life insurance is a contract between an individual and an insurance company, where the individual pays regular premiums in exchange for a lump sum payment, known as a death benefit, to be paid to designated beneficiaries upon the insured person's death. This financial protection is designed to provide for the insured's dependents or beneficiaries in the event of their death, helping to replace lost income, cover debts, pay for funeral expenses, or meet other financial needs.
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How much life insurance do I need in my 50s, and why?
A common rule of thumb is to purchase a life insurance policy that provides between 10 and 15 times your annual income. In reality, the amount of life insurance you’ll need will depend on several factors, including:
Your life insurance goals
Think about why you need life insurance as a 50-year-old. Are you hoping to leave money behind for your family if you pass away unexpectedly? Do you want to use it as an investment product? Or are you simply hoping to cover your final expenses?
Your family
Think about the people who will be impacted financially if you are no longer around. If you have a spouse, children, or other dependents who rely on your income for financial stability, you may want to make sure they have coverage when you’re gone.
Future expenses
Beyond your family’s current expenses, you may want to consider their future expenses. For example, you might want to set money aside for your children’s major life events, such as buying a house or starting their own family.
Your current debts
If you’re still paying off a mortgage or any other debts, be sure to keep the outstanding debt in mind.
Types of life insurance plans
Now that you’re thinking about your life insurance goals, it’s time to evaluate the different types of life insurance available.
Term life insurance
Term life insurance is well-known because it is often the most affordable. It’s a pretty straightforward insurance product – you’ll pay monthly premiums in exchange for the amount of coverage. These policies come with a set term, after which the policy expires. If you pass away while the policy is active, the death benefit of the policy will be paid out to your beneficiaries.
Term life insurance policies typically come with terms ranging from 10 to 30 years. When a term life policy expires, you may be able to convert the policy to a permanent policy. Another option is that you may be able to renew the term life insurance policy on an annual basis.
However, if you purchase a term life insurance policy in your 50s, you need to remember that there might be some limitations based on your age. You may not be eligible for some life insurance providers' longer terms. There may also be limitations on what you can do with your policy once you’ve reached the end of the term.
Permanent life insurance
Permanent life insurance is typically more expensive than term life insurance policies but also comes with additional benefits. These policies last for the entire lifetime of the insured person, so you won’t have to worry about your options after a term expires. These policies can also be referred to as whole life insurance policies.
One of the main benefits of permanent life insurance is that it allows you to build a cash value and provide a death benefit. The cash value is built up over time as you pay your life insurance premiums, and as the insured person, you can benefit from it directly. You can use the cash value to , or borrow against it to use the cash when you need it.
Final expense insurance
Final expense insurance is a unique type of life insurance that falls under the whole life policy umbrella. It is designed to give your loved ones the funds they need to honor your wishes and pay for your end-of-life expenses. This can include funeral costs, burial costs, and cremation costs. Additionally, it can help cover probate costs and out-of-pocket medical bills that might be left behind for your loved ones.
Up to $2 million in coverage
- Get covered in 5 minutes.
- 95% of customers approved.
- No Hassles. No Gimmicks. Easy Application.
- Non-Commissioned Agents.
- Ages 20+
- 100% Online Application.
- Fast Coverage.
Why get life insurance in your 50s?
- To provide financial stability. If you suddenly disappear from the lives of your loved ones, that’s traumatic enough. Life insurance can help you provide financial stability so they have one less thing to worry about.
- To cover your debts. Debts can often fall into the “out of sight, out of mind” category – especially if you have them on autopayments. Life insurance can help you pay off those debts and avoid them being inherited by your loved ones.
- To leave a legacy. A legacy can mean whatever you want it to mean. Whether you want to leave a sizable inheritance for your family or a donation to a beloved charity or alma mater, life insurance can be your vehicle to do so.
Pros and cons of buying insurance in your 50s
Buying insurance in your 50s comes with its own set of advantages and disadvantages. Here's a breakdown:
Pros
- Financial protection. Insurance provides financial protection for unexpected events such as illness, accidents, or death, which can be especially important as you age and your health issues become more unpredictable.
- Estate planning. Life insurance can be used as a tool for estate planning, helping to ensure that your loved ones are provided for and that any outstanding debts or expenses can be covered.
- Health coverage. Health insurance becomes increasingly important as you age, as healthcare expenses rise. Having adequate health insurance can help cover medical costs and provide access to necessary treatments and medications.
- Peace of mind. Knowing that you and your loved ones are financially protected in emergencies can offer peace of mind and reduce stress.
Cons
- Higher life insurance rates. Insurance premiums tend to increase with age, so purchasing insurance in your 50s may mean higher monthly premiums than purchasing at a younger age.
- Limited options. Some types of policy, such as life insurance or long-term care insurance, may have limited options available or be more expensive to purchase in your 50s compared to when you were younger.
- Pre-existing conditions. As you age, you may develop pre-existing health conditions that could affect your insurance or increase premiums.
- Limited term. Depending on the type of insurance, purchasing at an older age may mean a shorter coverage term or limited policy duration options.
Best life insurance companies for 50-somethings
When shopping for any insurance, it can be easy to get overwhelmed. While there are several life insurance companies to choose from, here are a few that we think are worth considering.
New York Life
New York Life offers a wide range of life insurance products, making it a good choice for 50-somethings. The company offers term life insurance, whole life insurance, universal life insurance, variable universal life insurance, and accumulation-focused life insurance.
The accumulation-focused life insurance is a particularly unique product. While the other types of whole life insurance offer a cash value component to the policy, the accumulation-focused life insurance policies take it a step further. It offers enhanced cash value in the first years of coverage, allowing policyholders to prioritize the cash value aspect of the policy.
One potential drawback of New York Life is that you cannot get a life insurance quote from the company online. Instead, you have to contact an agent to get a quote and purchase a policy. That being said, New York Life offers online tools to help you better understand your life insurance options and reach out for more information.
Mutual of Omaha
Mutual of Omaha offers budget-friendly life insurance coverage for all ages. Its policies include term life insurance, whole life insurance, and universal life insurance.
This life insurance provider’s website makes it easy to compare and evaluate your life insurance options quickly. It provides an easy chart to review the products offered at a glance. Within minutes, you can identify policies that can provide lifelong protection, fixed premiums that won’t increase, the ability to change the policy’s death benefit, and more.
Additionally, Mutual of Omaha offers optional policies that you might find worthwhile. This includes a Children’s Whole Life Insurance policy, which can provide long-term protection to children or grandchildren under 18. It also includes an Accidental Death Insurance policy, which provides guaranteed financial support for a covered accident.
With Mutual of Omaha, getting quotes and applying for coverage is quick and easy. You can select the coverage you’re interested in online to start the process. You can also contact Mutual of Omaha’s highly-rated customer service line for additional support.
Penn Mutual
Penn Mutual offers both term and permanent life insurance policies to provide comprehensive coverage for individuals and families. This insurance provider is very goal-focused, making it easier for interested parties to browse the website and find the most suitable solution for their situation.
One of the best “selling points” for Penn Mutual is that it does not always require you to undergo medical exams or lab tests. This can make obtaining life insurance quicker, easier, and, in some cases, even more affordable. In some cases, you can receive approval for a policy in just a few hours.
Penn Mutual does not offer the ability to obtain quotes online. However, the company has a strong history and an AM Best rating of A+. You can search the Penn Mutual website to find a Financial Professional who can help you learn more about the policies available.
Up to $2 million in coverage
- Get covered in 5 minutes.
- 95% of customers approved.
- No Hassles. No Gimmicks. Easy Application.
- Non-Commissioned Agents.
- Ages 20+
- 100% Online Application.
- Fast Coverage.
The bottom line
It’s not too late to purchase life insurance, even in your 50s. At this stage of your life, you might have to change priorities or financial obligations. This stage of your life and the circumstances you find yourself in could make purchasing life insurance worthwhile.
If you’re considering a new life insurance policy, take your time. Consider your options, goals, and the life insurance companies that offer the policies you’re interested in. If you’re deliberate in your decision-making, you’re likely to make a worthy investment.
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Writer
Ashley Hart is a lead copywriter and digital marketing expert covering finance, law, real estate, music, entertainment, health and wellness.
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