10 Things Anyone Over 50 Must Know About Life Insurance

Some people think it’s too late to buy life insurance after age 50, but that isn’t true. While there are certain challenges to getting life insurance after this age, there are still plenty of options.

Life insurance can be a great tool for making sure your loved ones can pay their bills and maybe even get ahead financially after you are gone. Here is what everyone over 50 must know about life insurance.

1. There are good reasons to purchase life insurance after 50

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Life insurance can help ensure your dependents are taken care of when you are gone. If you die unexpectedly, those who rely on you financially may struggle unless they have this coverage.

Life insurance can bridge the gap financially for those you leave behind, helping them with daily expenses and possibly offering enough money to help them move beyond living paycheck to paycheck .

Or, you can purchase a more modest policy that will help cover your funeral costs.

2. You have to decide which type of life insurance policy you need

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There are many types of life insurance policies that fall into two general categories: term life insurance and permanent life insurance. Depending on your needs and budget, you may prefer one type over another.

Term life insurance is a policy that is in effect for a set amount of time. You pay premiums monthly or annually in exchange for coverage during the policy term. Once the period is up, you are no longer covered.

Permanent life insurance does not expire as long as you pay the premiums. This policy also offers cash value that builds up over the years and that you can withdraw.

Term life insurance usually costs less than permanent life insurance.

3. Premiums will likely cost you more

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Yes, life insurance premiums will cost you more when you are older. Age and health markers are two of the big risk factors insurance companies use to calculate premiums.

NerdWallet estimates that a 20-year $500,000 term-life policy for a 50-year-old in excellent health will cost $819 a year for men and $642 a year for women.

You will have to decide if the higher cost of purchasing life insurance at this age is worth the peace of mind.

4. You might still qualify for a long-duration policy

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Some people may believe that you can’t qualify for long-term policies once you reach 50. But it’s still possible to get a long-duration policy at that age.

The average life expectancy is 74.8 years for men and 80.2 years for women, according to the Centers for Disease Control and Prevention. While your age will be considered during the underwriting process, it’s not the only factor that goes into determining the cost and length of your policy.

5. A shorter term can save you money

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Term life insurance can be purchased for a set period, such as 10 to 30 years. These policies are much less expensive than whole life policies because they expire after the term is up.

If you are just looking for coverage for a short period, term life can be the way to go.

6. You might have an option to add 'living benefits'

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Living benefits on a life insurance policy are riders that offer financial benefits you can tap into while you are still living. You can use the money to pay for things like care associated with chronic illnesses, permanent disabilities, or terminal illnesses.

You will have to pay extra for living benefits, but this type of rider could provide you with financial support during specific types of life events.

7. You might be able to skip the health exam

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The majority of life insurance policies require you to fill out a health questionnaire and to undergo a medical exam. But some policies do not require an exam and offer a fast-track route to getting life insurance.

You will still need to provide accurate personal medical history and answer lifestyle risk questions, but these policies are issued much faster than those that go through the traditional underwriting policy.

This accelerated process will likely come at a higher cost and you may be limited in the amount of coverage you are able to get.

8. You can have multiple policies at one time

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If you have an existing life insurance policy but you want to add more coverage, you are allowed to have multiple policies at once.

In some cases, this strategy can increase your total coverage while keeping overall costs lower.

9. Life insurance benefits are generally tax-free

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Life insurance proceeds generally are not taxed as income. This means the loved ones you leave behind will receive the money without having to pay taxes on it.

Many people take comfort in knowing that all of the death benefit will go to the people they are trying to protect.

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10. You may not need life insurance

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While life insurance can be part of a smart financial plan, it’s not necessary for everyone. If you have enough wealth to cover your final expenses and care for any remaining dependents, it’s unlikely that you need life insurance.

You could choose instead to save the money you would otherwise spend on premiums and use it for your personal needs. Or, you could earmark the savings for leaving an inheritance or making a charitable donation at your time of death.

Bottom line

Even if you have a history of health issues or lifestyle factors that make getting a traditional policy difficult, you still might be able to find a life insurance policy that will boost the financial fitness of loved ones.

Life insurance isn’t necessary for everyone, but many will find that it can provide much needed financial support to those they leave behind.

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