I’m Over 50 Do I Need Life Insurance?

Do I Need Life Insurance if I'm Over 50?

over 50 life insuranceTraditionally life insurance is something that we get when we have a young family and a high mortgage, in order to provide for our family should we die. But what if we are older and want to invest in some life insurance?

Insurers will often provide policies specifically aimed at people over 50 which have both their benefits and their problems.

What are the good and bad points of a policy for someone who is over 50?

If you are over 50 and looking to get some life insurance you may be attracted by the positives that some insurers provide in their over 50s policies.

  • No health questions.
  • No medical
  • Guaranteed acceptance

It is important to note that there is a cost for these benefits in that premiums are usually quite high. This is understandable given that being over 50 you are getting more likely to die and the insurers are taking a high risk by accepting you for a policy with no questions asked. The only problem is that if you are a completely healthy individual you may be paying a high amount to compensate for those that are not in good health.

Why would you want life insurance if you are over 50?

The wish to acquire life insurance when you are over 50 years old usually comes from a wish to protect others. With the problems that the recent world financial crisis has caused many parents are keen to protect their adult children from any further financial burden which may occur should they die.
There is also the question of the cost of care. As the world population continues to live longer, so care costs in advanced age rise; these costs can be crippling and there may be no money left on death, hence the need for life insurance.

What are the alternatives?

Given the nature of the costs incurred as people age many people consider the option of long term care insurance which can be expensive to acquire but helps to mitigate against some of the exorbitant care costs which can be encountered.

Recently another option has come onto the market, a hybrid of the life insurance and long term care insurance policies. This is usually a permanent rather than a term life insurance policy and is paid by the individual through premiums or sometimes a lump sum of amounts such as $50,000 and $75,000. The amount paid out on death is usually approximately double the amount paid in and some insurers will guarantee the minimum amount payable.

In the meantime if there is a need for long term care the policy will pay out approximately six times the amount paid in. The amount paid out for care is usually deducted from the amount paid out at the time of death; this is why having a guaranteed pay out on death can be useful. It should be noted that the costs of these hybrid policies can be high and there may be a waiting period before any money is paid out for care, but it is still worth considering if you are over 50 and looking for life insurance.

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19 Responses to I’m Over 50 Do I Need Life Insurance?

  1. Jayson @ Monster Piggy Bank 09/10/2014 at 3:22 am #

    I’ve had term insurance for three years now. But, I am planning to change it into permanent. Do you think I would lose some money? My early planning seems to have gone to the wrong way. Haha. Now I am more serious to securing the real “life insurance”.

  2. Joshua 07/29/2014 at 7:41 am #

    Personally, I think everyone should have life insurance. I’m 26 and would hate to see the position I’d leave Ana in should I get in a car accident and leave her with the financial burden…it just wouldn’t be fair.

    • Paul 07/29/2014 at 11:27 am #

      Can’t agree with you more Josh! I just upped my life insurance to make sure college would be paid for my children.

  3. No More Waffles 07/28/2014 at 11:00 am #

    The only reason to have life insurance, in my opinion, is when you have dependants that could get into financial trouble if you’re not around anymore. Of course, that’s in Belgium where I live. Things seem to work a little differently in the US.

    Do you receive any tax benefits from paying for life insurance?

    • Paul 07/29/2014 at 11:38 am #

      While there are no tax benefits for the premium paid for life insurance there are several tax strategies regarding insurance proceeds. Beneficiaries can receive a lump-sum payment upon death of the policy holder and the proceed is not considered income. It is part of the estate however, and may trigger an estate tax liability. One strategy to avoid the estate tax on insurance benefits is to assign ownership of the policy to a trust or other individual at least 3 years prior to the original owners death.

  4. Tom 07/20/2014 at 3:11 pm #

    A great idea, as if you become unable to fund your funeral from your estate, you wouldn’t want your next of kin to be burdened (as you mentioned). As much as dislike insurance company tactics sometimes, this point is undeniable.

  5. Will 07/17/2014 at 4:50 pm #

    My grandparents have had LTC insurance and just now have gone to a care home. While I haven’t done the math, LTC insurance appears to be a life saver for our family. It’s insane how much those care homes cost per day! I’m interested more in these hybrid policies.

    • Paul 07/17/2014 at 7:37 pm #

      Same thing with my mother-in-law Will. It can wipe out a families savings so it’s a good idea to purchase a policy in your fifties before premiums take a dramatic increase.

    • Paul 07/26/2014 at 8:18 am #

      It’s either LTC insurance or qualify for Medicare. To do that you will need to demonstrate financial need, sign over income for qualifying person and 50% of qualified assets. When the surviving spouse passes, the State will most likely file a lien on the property to recover medicare funds.

  6. Jon @ Money Smart Guides 07/14/2014 at 4:45 am #

    I’m in my mid-30s and we are planning on starting a family so I will probably have life insurance in my 50s since I will still have others dependent on my income. You really just need to sit down and run through all of the scenarios to determine if you need the coverage or not.

    • Paul 07/15/2014 at 4:51 pm #

      I did a comprehensive insurance analysis several years ago when I was studying for a CFP program. It was an eyeopener to say the least!

  7. Money Beagle 07/08/2014 at 9:21 am #

    We have a 20-year policy that will run until I’m in my late 50’s and my wife is in her early 50’s. I think, as it’s been said already, that your kids and dependents are the key factor. As of right now, I have two little ones, so it’d be important that my family would be taken care of in the event something happened to me.

    • Paul 07/10/2014 at 11:56 am #

      I’ve got two kids and one of them is a dependent. Income replacement and paying for college is the reason why I have life insurance.

  8. Kate @ Money Propeller 07/07/2014 at 8:30 pm #

    My mom is over 50 years old already and she has a life insurance. For her, it’s better to be prepared and if something happens to her “knock on wood”, she doesn’t want to leave problem to us.

    • Paul 07/10/2014 at 12:00 pm #

      Thanks for stopping by Kate! Life insurance is just what you stated, it provides for your loved ones in case something happens to you. I can’t think how difficult it would be for my children if they had to deal with financial hardship in addition to losing a parent!

  9. Little House 07/07/2014 at 7:01 am #

    I’m probably over insured, but I want the peace of mind that if I were to die, Mr. LH would be able to deal with any financial issues for a year or so. I definitely want to get long term care insurance when we turn 50. It seems like a good way to cover health care costs as we age.

  10. Aaron @ Easy Street 07/02/2014 at 11:09 am #

    While I am not quite 50 yet, I am, more likely than not, over insured as well. I have two small kids and provide the sole means to a steady income. Since they are relatively young, I will continue to have life insurance well into my 50s!

    • Paul 07/02/2014 at 1:11 pm #

      Good for you Aaron! One of the benefits of life insurance is that the benefit passes outside of probate directly to the beneficiary. This can provide a much need benefit relatively quickly to your beneficiaries.

  11. maria@moneyprinciple 06/30/2014 at 1:30 pm #

    I’d say that whether ot not one needs insurance over 50 depends on whether ot not they have dependents (and how much is their estate worth). I am insured up to my eyeballs at the moment – main breadwinner and son of 13. I aslo wouldn’t wish John to have money worries if something happens to me. When son is grown up and we are wealthy I won’t need insurance :).

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