It’s one thing to be 35 and be purchasing a life insurance policy to protect your young family. Things are pretty clear then. Your mortgage is generally a long one. You have a lot of years of income replacement to consider. You have dependent children, often very young.
The conclusion is usually that you should carry a substantial amount of insurance, 10 to 20 times your annual income and you should lock in a long term, 20 to 30 years or more. The good news is you’re young and the price of life insurance, even rated due to health issues is amazingly affordable.
But when you’re over 50 life insurance needs are different and it’s just prudent to consider those needs against any current life insurance coverage you have, and of course if you don’t have life insurance, carefully consider those needs and weigh the price of protection against the potential price of continuing on embracing the immortality that you believe got you this far.
When I say needs are different, most of those changes point toward needing less insurance. For most of us the dependent children are, at least theoretically, no longer dependent which crosses them off of the “need” list. Even if they are still around, at least the amount of time they will have a presence on the need list should be a lot smaller. I know my philosophy on this doesn’t run the same route as all parents. Many consider carrying life insurance as a way to leave a legacy or inheritance that they might not otherwise leave behind. I don’t have an issue with that if it’s something you feel strongly about and you’re comfortable with the price, ie. it’s easily budgetable. But, for me, I don’t believe we owe it to them. We paid to raise them. I don’t believe we need to continue to pay to frost that cake.
When you’re over 50 life insurance is more expensive per thousand than when you were 35 just due to age, if not health. For that reason I believe I think it’s important to use that additional 15+ years of wisdom to make sure that we spend our life insurance dollars prudently. **Important to not perpetuate the urban myth that at age 50 life insurance takes some kind of quantum leap in premiums. For instance, using $250,000 of 20 year term at preferred rates the best rate for age 49 is $47 a month. At age 50 it is $52 a month. It goes up incrementally a little more with each year of age, but there is no one age where it takes an inordinate jump.**
Another change in our favor over 50 is that our need for income replacement is in most cases a shorter need than it was at age 35. A need that required a 30 year or longer term at younger ages might only need a 15 year window of coverage. Because we’re older the amount of coverage it takes to replace our showing up missing at the dinner table is smaller, being offset by assets that our widow can use and the fact that she won’t have to use them as long in her advanced years.
And, with the exception of me, most folks over 50 don’t have new 30 year mortgages. Most are paid down or paid off, so mortgage life insurance should be less of a need than in earlier years. And even with me I plan on paying it off much quicker than 30 years.
Bottom line. Don’t let the age 50, or any other age scare you. Our life insurance might cost more per thousand but in general we need a lot less and we’re smarter about the way we buy and structure it.