Life insurance can be an important component of most any financial plan. The proceeds of a life insurance policy can be used for many different reasons, depending on the needs of your survivors at the time.
While many people may feel that life insurance is no longer necessary once an individual no longer has dependent children, the reality is that this type of coverage can be necessary at any age – and regardless of whether or not you have any dependents who are counting on you financially.
Why You Still Need Life Insurance After Age 50
No matter what your current age is, you can have the need for life insurance. Just some of these reasons may include the following:
- Funeral / Final Expenses – When someone passes away, he or she is likely to have funeral costs, as well as other related final expenses. These can include a burial plot, a headstone, flowers, transportation, and the cost of a memorial service. On average, final expenses today can run in the range of $8,000 to $10,000. Without life insurance, these costs could fall to your loved ones – who may or may not have a way to get them paid. A life insurance policy, however, can provide them with the funding that they need.
- Payoff of Debt(s) – You may also have debt obligations at the time that you pass away. Many years ago, those who were over age 50 were more likely to have their mortgage, auto loans, and other types of debts paid off. Today, however, especially with people living much longer, it is possible that you could have a long list of unpaid debts – some or all of which could fall to your survivors.
- Retirement Income Replacement – If you are married, or you have a significant other, he or she may be counting on some or all of your retirement income for their living expenses. But, in many instances, if the recipient of a pension or other retirement income source dies, some or all of this income could disappear. This could leave your loved one with no way to pay their future expenses. But, by having life insurance, you could help them to replace the incoming cash flow that they need.
- Estate Taxes – There are some people who are over age 50 who could also use the proceeds of a life insurance policy to pay for any estate tax that may be due. Otherwise, this tax obligation could fall to your survivors and loved ones.
- Charity – You may also want to donate money to charity. While you can still do so while living, by making the charity the beneficiary of a life insurance policy, you can increase the amount that they receive exponentially – and, because charitable organizations are not subject to tax, the entity will be able to make use of 100 percent of the proceeds.
- Business Purposes – You may need to purchase life insurance as a part of a buy sell agreement or key person life insurance policy.
Having a life insurance policy in place can also help you to make good on your promises. For example, the proceeds could be used to fund a child’s or a grandchild’s college education, or for a loved one’s down payment on a home – and, these promises can be fulfilled, even if you are not there to see them.
Types of Over Age 50 Life Insurance Coverage
When you are over the age of 50 seeking life insurance coverage, you can still have a number of different types to choose from. These can include either term and permanent policies, as well as fully underwritten and / or no medical exam coverage.
It’s important when buying life insurance to consider how long you need the policy to last.
With a term life insurance policy, you will be covered with pure death benefit protection only.
These policies can be purchased for a certain number of years, such as 10, 20, 25, or even 30 – depending on the age and the health condition of the insured at the time of application.
Permanent life insurance is also available to people who are over 50.
With a permanent life insurance policy, you will be covered with the policy’s death benefit, and depending on the policy and the policy design you will also have the ability to build up savings within the policy’s cash value component.
The funds that are in the cash value component are allowed to grow on a tax-deferred basis. This means that there is no tax due on the growth of these funds unless or until they are withdrawn.
Having said that there are two ways you can access cash value in a permanent policy without having to pay income tax.
One is by just withdrawing cash value, if it is available, up to the basis (amount you paid in premium.) The other is by taking a loan for the policy.
Know that this is a more advanced technique. If you are going to be taking money out of your cash value make sure that you work with an experienced agent that understands how to do this properly.
When done correctly this can be a nice way for some people to help save money and supplement their retirement income.
When not done properly problems can arise such as adverse tax consequences and policies that lapse when you didn’t want them to.
Know that if you do withdraw or borrow the funds that are in a permanent life insurance policy, that you can use the money for any reason.
Qualifying for Life Insurance
In most cases, you will be required to qualify for life insurance. This is typically done by first fully completing an application for coverage.
Fortunately, many insurance companies have embraced modern technology and applications can be usually be completed over the phone and emailed to you for electronic signature.
Gone are the days of having to print out an application and do this with a pen and paper.
Depending on the insurance company you apply with there are different requirements that each insurance company requires. Some will require:
- a medical exam (examiner typically meets you at your home or could be at your place of business.)
- a prescription drug check
- a motor vehicle report check
- your medical records
If you have an adverse health condition, you could apply for a no medical exam life insurance policy.
This type of coverage does not require you to take a medical examination to qualify. However, many people get the false sense that this means that there is no underwriting when it comes to no exam life insurance.
The type and the amount of life insurance that is available to an applicant who is over the age of 50 may also depend in large part on the insurance company that you are purchasing the coverage through.
For instance, different life insurance carriers may price their life insurance coverage differently – even for the same type and amount of policy.
With that in mind, it makes sense to compare several different life insurance policies before you make your purchase.
Where to Get the Best Premium Rates on Life Insurance If You Are Over 50
If you are ready to compare life insurance policies and are over age 50, I can help. I work with many of the top life insurance carriers, and I can get you all of the details that you need.
When you are ready to proceed, just simply take a moment to fill out the quote form on the side of this page. Or just give me a call.