I turned 59 the other day and boy am I glad I already have my life insurance in force. I’ve heard that life insurance over 60 really takes a huge jump. But wait, I heard the same thing about over 50 life insurance and that wasn’t exactly true.
The absolute truth about that urban legend is that there is no magic age, one particular birthday, where life insurance rates take a leap of the unrecoverable edge. Now I can tell you that there is some sticker shock when you buy a 10 year term when you’re 54 and then want a new one when you’re 64. Even if your health is still good, age is not your friend. I spoke with a client today in that very situation. He was approved at standard 10 years ago and is still a standard plus risk. He bought $500,000 of 10 year term then (even though he was shown longer terms) and it cost $1770 a year then. His new 10 year term is $3800 and he is considering a 15 year term at $5680.
In comparison, although buying a ten year term earlier doesn’t make a lot of sense, if he bought the last policy at 34 it would have cost him $310 a year and getting a new 10 year term at 44 would have cost $600. It seems when you look at 10 year spans like something horrible happens with life insurance after 50, but take this same guy at age 49 it would be $965 a year, age 50 $1045 a year and age 51 $1120 a year. It really is a gradual climb but with each year the steps get a little higher.
My encouragement to those who purchased a 10 year term and now know that they will want insurance beyond that 10 years is to take a look now at the cost of waiting. Even if you have 5 years left at a rate that you obviously would like better than anything higher, if you compare changing now to the cost of changing at the end of the term it may be worth a little bullet biting, especially if your health is not headed in the right direction.
I know so much of it comes down to budget and it should. While I’m no fan of Zander Insurance, Dave Ramsey’s life insurance love of his life, I do believe the things Dave talks about when it comes to being serious about budget. If you strain your budget with life insurance it will not stay in force and when it lapses you not only lose what you’ve put in to it, but you also lose the protection your family deserves. Better to buy a smaller amount of insurance, something that can weather financial upheavals because it will stay in force because something is always better than nothing when it comes to life insurance.
Look, by today’s standards I know I’m not old and neither are those in their 60’s. 70’s is getting a little dicey, but I see so many people active and thriving then that it just goes without saying that whether you are over 50, over 60 or over 70, life insurance planning is critical. Make the wrong choice and have a serious health change and dang it, well, we just don’t get the easy re do’s that a 40 year old does.
Bottom line. If I were the King of the insurance companies I would make it a lot easier on guys like me and my client I talked about, but so far no one has shown up with that crown. If you have any questions or would like to get some real numbers to assess the cost of changing versus waiting, call or email me directly. Let’s talk.