I’m going to tell you something other agents won’t.
Believe it or not, I give completely different advice to my clients in their 50’s than any other age group.
Term or Whole Life in Your 50’s?
(The answer may surprise you)
For the majority of 50-59 year olds, a 10-20 year term life insurance policy will suit their needs perfectly.
… perhaps you’ve spoken to agents who only want to quote whole life. (of course, they want the bigger commission check.)
The Truth Is: Most of my clients in their fifties won’t need coverage 10 to 20 years down the line when they stop working, since they are paying down their mortgage, with more of their payment going towards principal than ever before, and are contributing more to their 401(k) or IRA than ever before.
So if you only work another 10 to 20 years, and only need life insurance to replace lost income, term life insurance is probably best for you, rather than a more costly permanent insurance product. Consider the difference in premiums in term life insurance vs. universal life insurance.
Quick Guide to this Article
- Sample Quotes for 50 to 59 Years Old
- More on Term vs. Whole Life
- Uses for Life Insurance in your 50’s
- Is Buying Life Insurance in your 50’s a Good Investment?
- Types of Policies Available
- The Cost of Waiting
- Final Tips
Term Life Insurance Quotes, 50-59 Years Old
Age $100,000 $250,000 $500,000 $1 Million
50 Year Old Male $14.16 $24.36 $42.20 $76.56
51 Year Old Male $15.22 $26.97 $48.05 $88.56
52 Year Old Male $16.08 $29.20 $52.32 $98.58
53 Year Old Male $17.11 $32.82 $59.57 $109.89
54 Year Old Male $18.40 $36.34 $66.22 $120.15
55 Year Old Male $19.69 $39.56 $72.67 $133.06
56 Year Old Male $21.16 $43.22 $79.98 $149.97
57 Year Old Male $22.88 $47.52 $88.58 $166.88
58 Year Old Male $24.94 $52.20 $98.90 $182.01
59 Year Old Male $26.80 $56.33 $107.45 $199.81
(Premium Rates based on healthy, non-tobacco using male, 10 year term life insurance quotes, as of 1/3/2014, subject to change)
Should I Buy Term or Whole Life Insurance?
You can clearly see the significant increase in premium for a guaranteed universal life contract. Permanent insurance certainly has its proper uses; all I’m saying is for this amount of difference, you better be sure you need permanent insurance rather than term if you’re going to be paying 5-9X the premium. Many agents have pushed for their clients to purchase permanent, but then the policyholder allows the policy to lapse after they no longer need the coverage.
A good agent will ask you information about your assets (home, investments, etc.), contributions to retirement plans, and review your debts. This is one of the areas I feel I shine as a life insurance agent, since I’m a licensed investment advisor representative, and am experienced in advising how your life insurance policy should fit into your complete financial plan. (For more information, please visit our About Us page.)
Then your agent should review the various benefits of your policy which may include convertability and renewability, return of premium, or long term care benefits. Understanding your term life insurance policy’s benefits is vital in deciding how long of a term you will choose. You’ll most likely be selecting from 10 year term, 15 year term, or 20 year term life insurance contract, but this will largely depend on your needs.
Why Purchase Term Life Insurance in Your Fifties
While the majority of my clients between the ages of 50 to 59 years old purchase term life insurance for income replacement purposes, here are a few other uses for life insurance in your 50’s.
- Maxing out your Pension – If you’re nearing retirement and have the choice of taking a single or joint life pension payout, you’ll find in many cases that you can earn significantly more by taking the single life payment option, and purchasing life insurance for your spouse. See more…
- Long Term Care Needs – As we age, we start thinking ahead to the possibility of needing some sort of assisted care as we get older. Many of us look into long term care and find the cost is outrageous. But did you know that many life insurance policies offer the ability to take money from your death benefit early for long term care expenses? … and this is so much cheaper than traditional long term care. See more…
- Leaving Money for Charity or Religious Organizations – Let’s say you have $10,000 earmarked in your will for the Salvation Army. If you’re a 57 year old male in good health, do you know you could use that $10,000 to buy a $30,000 life insurance policy and leave the Salvation Army as the beneficiary? Yep, that’s triple what you had planned to leave them. (this is a permanent policy, not term.)
- Life Insurance as an Alternate Investment – I’ll cover this in the next section “Is Life Insurance in your 50’s a Good Investment?“
I also have affluent clients (ages 50-70 mostly) who purchase life insurance for estate planning purposes. In this case I don’t recommend term life insurance. Instead, a survivorship life insurance policy or guaranteed universal life policy is usually the most suitable choice.
Is Buying Life Insurance in your 50’s a Good Investment?
At Huntley Wealth Insurance, we rarely recommend buying life insurance to accumulate a cash value and pull from the funds while you’re living (although there are many advocates for this.)
Instead, when we refer to life insurance as an investment, we’re looking at the return your beneficiaries will earn at your death based on the amount of premium you paid over the years.
We’ve created a calculator that will help you to determine if life insurance is worth it at your age. It looks like this:
Taking the example above, a 52 year old male in great health (non smoker) would pay $1,031 per year for a guaranteed universal life policy with a $100,000 death benefit and level premiums to age 121. We can see this is a “great” investment because if our 52 year old were to try to save up $100,000 in an alternate investment, starting today at $0, and contributing $1,031 per year, he’d have to earn an equivalent of 7.66% guaranteed every year through his life expectancy of age 80.
Generally speaking, if you’re in excellent health, you can expect to see equivalent rates of return in the neighborhood of 7.5% to 10% for lifetime guaranteed policies.
Better Bang for Your Buck with Term… but Not Guaranteed for Life
If you’re willing to “chance it” a bit, you could buy a 30 year term and the premium drops substantially, therefore increasing your rate of return. For example, our same 52 year old above would pay just $551 per year for a 30 year term, giving him an 11.12% rate of return if he dies at age 80. However, the problem with term here, is that his premiums will only stay level to age 82, and this strategy only works if you keep the policy until death.
What Types of Policies are Available through Age 59? (Watch out 55 Year Olds!)
We’ve referred to term a lot above. 10, 15, and 20 year term is available with just about any carrier through age 59. Many carriers (not all) also have a 25 year term that you can get at any age in your fifties.
*However, 30 year term is a bit different. Most of the main carriers (such as MetLife, Prudential, ING, etc.) have a max age of 55 years old and stop offering 30 year term at 56. We do have one carrier, Transamerica, that at the date of this article, allows you to buy a 30 year term up to 58 years old.
Before I dive deeper into this, let’s talk about why you may really want a 30 year term. If you’re 58, female, in good health, you can expect to pay $142 per month for a 30 year term for $250,000 coverage. That’s a pretty good deal, since the average life expectancy for a female age 58 is 84 years old (81 for males). Yet the 30 year term will give you level premiums to 88 years old! That means probably 80%-90% of the women who hold onto their policies will end up having a payout.
Contrast that to what happens if you put off your purchase and wait to age 59. At this point, with 30 year term no longer available, you’ll have to settle for either a 25 year term policy (which will still be affordable, but will only offer level premiums to age 84… a big difference between 84 and 88!) Your other option would be to buy a policy with guaranteed premiums to age 90, which will cost $183 per month, a $41 per month jump (or 29% increase) from if you had bought the 30 year term as a 58 year old, for pretty much the same benefit.
If you need coverage for a long time, I recommend getting going with a 30 year term early in your fifties.
… And be careful, 55 year olds! Don’t assume you can put off your life insurance purchase and that Transamerica will still offer 30 year term beyond age 55 next year. Who knows if they’ll pull that? Also, you can’t just assume you’ll be approved by Transamerica, particularly if you have any medical conditions, have a hazardous occupation, or travel outside the U.S., etc. There have been many cases where Transamerica has declined a client and I had to go elsewhere for an approval. So if you’re fifty-five, please don’t dilly dally. Get going on your application today. (you can get a quote in the quote form on the right.)
And of course if you’re 57 or 58, you REALLY need to get moving if you want a 30 year term.
There are three warnings I should give you about putting off your life insurance purchase in your 50’s.
- Decreased Policies Available – We already talked about your 30 year term option going away at age 58, but it’s not just 30 year policies. There are several companies who no longer allow 20 year term at age 50 or 55.
- No Exam (No Can Do) – While 10 year term is still largely available in your fifties without taking an exam, many carriers won’t allow 15 or 20 year term approvals without taking a medical exam beginning at age 50 or 55.
- Premiums Increase 12% per Year – In your early fifties, premiums will increase on average 10% for every year you put off your purchase. This increases as you get to your late 50’s. For example, a 59 year old male will pay $194 per month for a $500,000, 20 year term policy. A 60 year old will pay $217 per month. That’s just a 12% increase. Oh, but it’s not just a “turning 60″ issue. The increase from 60 to 61 is 16%.
As you can see, there are many reasons you don’t want to put off your purchase. If you need help determining your life insurance needs, call us at 877-443-9467, and we’ll be happy to help you.
When shopping for term life insurance, it’s important to shop the rates and premiums at various insurance companies to find the best insurance plan for you. There are many competing insurance carriers, and it’s best to use an agent who will know where to get you the best deal, particularly if you have previously been turned down for coverage or have any medical conditions.
Also be careful about who you select as your beneficiaries, especially if you have a child under the age of 18. Then be sure to check your policy periodically to review your decision. Your beneficiaries could change if you get married, divorced, or as your children get older.
Instant quotes for 10, 15, 20, 25, and 30 year term, along with return of premium and universal life are available to the right, or call us at 877-443-9467.