While we all dream of early retirement, the fact is most people in their 50s have a lot of financial responsibility. Whether you’re paying off your mortgage, supporting a family, or saving for retirement with your spouse, your income is important.
So, what happens to your family if you pass away and they can no longer rely on your income? Life insurance can help ease their financial burden, so it’s worth considering, no matter how old you are.
Life Insurance Options for People in Their 50s
There is a range of life insurance products available to people in their 50s. They can be broadly divided into two categories: term life and whole life.
Term Life Insurance
Term life insurance covers you for a set period. For example, if you have a 15-year term life policy and you die within that time, your family will receive a payment from the insurer.
The premiums are set at the start, and they don’t change until the policy term is over. Generally speaking, the older you are when you apply for the policy, the more expensive your premiums will be. Policies with longer terms tend to have higher premiums too.
The lender may also impose maximum term limits based on your age. Once the policy has lapsed, you can renew it, but you will be older, so it’ll likely be more expensive.
Many people choose term life policies because they are expecting their financial situation to change in the future. For example, in your 50s, you are probably working with debts to pay and dependents to support.
However, in 20 years, you’ll probably be retired, debt-free, and your children will likely be financially independent. In this case, when choosing life insurance, you may take out a term life policy to cover you in the interim.
Whole Life Insurance
Whole life insurance covers you until the day you die, no matter how far into the future that may be. Whether you pass away at age 55, 80, or 100, your family will receive a benefit payment.
The premiums you pay stay the same each year. However, it’s good to buy this type of coverage sooner (while you are still in good health) to pay a lower monthly premium. In general, whole life policies tend to be more expensive than term life policies because they cover you for longer.
Why Should I Get Life Insurance in My 50s?
If you pass away at the age of 50, will your family have enough money to live comfortably? Remember that without your income, their lives can change significantly, and their retirement saving goals might no longer be achievable.
Moreover, what happens if you get seriously ill? If you try to buy insurance after you’ve been diagnosed, the insurer may exclude your pre-existing medical condition from the new policy. Or they may include it and charge you a high premium for life insurance without a medical exam.
And of course, if you can’t work or you have medical bills to pay, you probably won’t save as much as you had planned. This means if you pass away, your family may not have a big enough nest egg to fall back on.
How Much Life Insurance does Someone in Their 50s Need?
The more life insurance you get, the more it costs, so you probably want to avoid over-insuring. Unfortunately, there’s no golden number that fits everyone. Insurers and brokers generally have online calculators you can use to get an estimate of how much life insurance you need. In general terms, however, there are a few factors you should consider:
The last thing you want is to leave your grieving family members with a huge debt hanging over their heads. So it’s important to have enough life insurance to cover your mortgage, car loan, personal loan, credit card, and any other debts.
How much will your family need to cover day-to-day expenses? Remember that in your absence, your family may need help to cover household upkeep too, such as cleaning, gardening, cooking. If you have young children and your spouse goes back to work, they may also need help with childcare costs.
A typical large expense that most people have is education. This could include college fees for your children and maybe even your grandchildren. If your spouse hasn’t worked for a while, they may also need training or upskilling to get back into the workforce.
What is the Average Cost of Term Life Insurance for People Aged 50 and Over?
Life insurance premiums are assessed on an individual basis, so it’s hard to predict what your premium might be. Your health, smoking status, and family medical history can all impact the cost. Life insurance brokers like Dundas Life can help provide you with a quote.
Life Insurance as an Investment
Life insurance is an important component of any investment plan. For most people, their 50s and 60s are the highest-earning years of their careers. This makes it especially important when saving for retirement.
If you were to pass away, your family may not have the financial needs to achieve a comfortable retirement. Life insurance is often a safety net that’s added to your financial plan to prevent this. A simple term life insurance policy up to age 65 (or your desired retirement age) can be sufficient.
For others, whole life insurance can be considered an investment itself because it is guaranteed to pay out when you pass away to cover funeral expenses and your family’s other financial needs.
A life insurance policy for a 50-year-old is more expensive than for a 20-year-old. However, if your family isn’t financially secure with a decent savings buffer, then you may want to consider getting additional coverage. Now, you should have a better understanding of the factors you need to think about when considering life insurance.
It’s important that you crunch some numbers and do some research before deciding if a life insurance policy is right for you.