When it comes to smart financial planning in your 50s, does life insurance have a rightful place in the mix? Here’s what to consider when it comes to life insurance for people over 50
You have many things to look forward to in your 50s — taking a bucket list trip with your partner, 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 ensure 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?
If you buy life insurance in your 50s, it 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 life insurance coverage might be the right move for you.
In this article:
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 partner.
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.
A life insurance policy is a contract between you and a life insurance company that helps financially protect your loved ones if you pass away. You pay a yearly or monthly premium and if you die while the contract is in place, the insurer pays a death benefit (policy payout) to your beneficiary. Your beneficiary (or beneficiaries) can use the policy’s death benefit to help cover funeral costs, meet day-to-day living expenses, plan for the future or use the money for whatever they need.
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.
Life insurance options for people in their 50s
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 versus whole life insurance
Term life versus whole life insurance 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 life insurance policy, as the name entails, provides coverage for a set period — usually 10, 15, 20, 25 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, the life insurance 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 life insurance 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 15-year, $250,000 Haven Term policy would start out at about $54 per month for a 50-year-old man in excellent health. 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 $534 per month, according to State Farm’s website.
Choosing the right policy and term length
Typically, if offered, a 30-year term would be fairly expensive. Most people in their 50s opt for 10-, 15- or 20-year term policies.
As previously noted, a 15-year, $250,000 Haven Term policy would start out at about $54 per month for a 50-year-old man in excellent health. That price would increase to about $77 per month with a 20-year term length. A 30-year Haven Term policy is not offered to people in their 50s.
Because life insurance 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 might 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 your life insurance cost.
How to buy life insurance online
Buying high-quality life insurance coverage is easier than ever because of 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. In some cases, a life insurance medical exam will not be required to finalize coverage. The purpose of the medical exam is to help the insurer determine the appropriate price for your policy. While it’s one of the only offline aspects of Haven Life’s application experience, we still take every effort we can to make the process streamlined and painless.
The medical exam itself usually takes about 20-30 minutes. You can schedule your appointment online or over the phone. The examiner can meet you at home, your place of business or an exam office. 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 partner have enough financial strength for retirement and emergencies, then life insurance may be an unnecessary expense.
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 life insurance 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 — life insurance rates are higher, and you may have other financial assets such as property, investments, and savings, which can be used.
However, if your partner relies on your income, life insurance can help replace it and allow him or her to comfortably retire. 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 an affordable price. If you know you need coverage, you can start the process for you and your family by getting a free life insurance quote.
About Tom Anderson
Tom Anderson is an award-winning financial journalist whose work has appeared in CNBC.com, Kiplinger’s Personal Finance, Money, Monocle and Wired. He was a 2008-09 Knight-Bagehot Fellow in Economics and Business Journalism at Columbia University.
Our editorial policy
Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our editorial policy
Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.
Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.
Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.
Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.
MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.
Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus
-Easy online application
-Can get coverage immediately after applying online
-Pretty seamless process throughout the experience Cons:
-Although told I was covered initially after applying online, I was informed that I needed to get physical check up in order to continue the plan.
-Although I’m very healthy, my plan price increased 2x after the physical checkup.
Applying for life insurance in your 40’s is exhausting!! But at least Haven made it as easy as possible! Everything is efficiently handled through email. Communication is excellent, they give updates all along the way. Scheduling the bloodwork is easy and convenient. Plus, the rate was better than other companies. Easy to sign off on paperwork.
The application was easy to complete and the rate quoted was very competitive. The amount applied for required an examination and that process was very convenient, efficient, flexible, and the medical professional was friendly and capable. The policy approved was exactly as quoted with an option to add to the amount originally applied for and I took advantage of the offer. Haven Life is a subsidiary of MassMutual, one of the highest rated companies in the insurance industry. I couldn’t be happier!
I shopped around for a few weeks before finding Haven Life. They made the application process very easy, and I was thrilled with the competitive rate they offered.
The folks at Haven Life were so response and helpful during my application period. They were also warm and kind.