If you’re over 50, you may have just seen your term life insurance policy expire, or you’ve had multiple policies expire over the years.
With retirement on the horizon, you may be wondering if you still need life insurance and if you even qualify for it anymore. To determine the right choice for your situation, ask yourself these five questions.
1. Who is financially dependent on you?
At this stage of your life, you may or may not still have kids at home. If you do, your need for life insurance is high. But if they’re already off on their own, hopefully, they’re independent enough that they wouldn’t suffer financially if you died.
If you have a partner, you’ll want to make sure you’re not leaving them behind saddled with debt or without adequate living expenses.
Another situation that’s rarer than the others we’ve discussed is if you have a dependent with special needs. In this situation, the need for coverage is much higher because you’ll want to not only take care of your loved one’s living expenses but also other expenses that come with their disability.
For this situation, you can set up a special needs trust and fund it with life insurance, so that your loved one can get a consistent income to get the care they need.
2. What are your goals?
Providing your partner with income replacement or a lump sum to pay off debts is a good motivation for life insurance. But that’s not the only way to use coverage at this stage of your life.
For example, you may want to leave a legacy for your kids, providing them with an inheritance that you might not otherwise be able to give them.
If there’s a charitable organization you’ve worked with over the years, you can also use life insurance to provide a large one-time donation. Alternatively, you can set up a charitable trust that makes periodic donations over time long after you’re gone.
3. How much coverage do you need?
While there may be some financial need after you pass away, it’s important to keep your assets in mind. For example, if your partner is the beneficiary of your retirement accounts, they’ll have access to those funds after you die.
So, if you have enough saved up for retirement that your partner can live comfortably, you may not need much coverage, if any at all. But if your goals require more than what your retirement income and other assets can provide, you’ll want to get enough coverage to bridge the gap.
It’s important to do the math when deciding how much life insurance coverage to get. Otherwise, you’ll end up spending extra money on coverage you don’t need, or you’ll leave your loved ones with less coverage than they need. You may need help from a licensed life insurance agent who can help you run the numbers for your specific situation.
4. Do you qualify for life insurance?
Getting over 50 life insurance isn’t quite as easy as getting life insurance in your 20s. But it’s still possible.
Because life insurance rates are largely driven by your age and health, chronic health issues can make coverage more expensive. But there are insurance companies that specialize in working with older people who have health problems.
If you think your health is so bad that you won’t even qualify for coverage, there’s a type of policy for that too. It’s called guaranteed issue life insurance, and it doesn’t require a medical exam.
Because there’s no exam, though, the insurance company takes on more risk by issuing you a policy. As a result, you’ll typically spend more on a guaranteed issue policy than a traditional life insurance policy.
Keep in mind, though, that depending on how much coverage you need, the insurer may ask you a few medical questions. So, if your medical issue is bad enough, either try to find an insurance company that doesn’t ask any questions or get a smaller policy that poses less risk to the insurer.
5. What type of policy should you buy?
There are two main types of life insurance: term and permanent. Term life insurance is typically cheaper, but it only offers coverage for a specific period.
If you’re looking at over 50 life insurance, you could be limited to a 10- or 15-year term. That may be fine if that’s how long you think you’ll need coverage. But if you need lifetime coverage, a permanent policy may be a better choice.
In addition to providing lifetime coverage, permanent insurance policies also come with a cash value component, which grows over time. As such, many people use permanent life insurance — either whole life or universal life — as a way to supplement their retirement income.
If you buy a policy now, though, it may take 15 to 20 years to accumulate enough cash value to make it worthwhile. So, keep that in mind as you determine whether it’s worth the cost.
What’s the right choice for you?
There’s no one-size-fits-all answer to whether you should get life insurance when you’re over 50. Even if you and your loved ones are financially set for life, getting coverage may still be a wise choice if you have specific goals that require it.
Leap Life’s team of licensed life insurance experts can help you answer these and other questions you might have about over 50 life insurance. They’ll walk you through the process of determining whether it’s right, how much coverage you need, if any, and what type of coverage you should get.
They can also give you quotes from multiple life insurance companies to help ensure that you get the best rates possible for your situation.