Being over 50 myself I read that title and my mind immediately went to the thought that, “Well of course it has new meaning. We’re a lot closer to using it.”
Whoa, admitted my own mortality there! But what I want to get at is the fact that the needs and uses of life insurance over age 50 are far removed from the needs of someone in their 20’s or 30’s. In addition when you are over 50 life insurance underwriting of health issues can become more of a factor than at earlier ages.
But for now let’s assume great health and just talk about how our needs change and how we can use life insurance differently when we are suddenly thrust on to the AARP mailing list. The first thing that’s very different from our younger years is the fact that we have some sense of where we’re going, when we’re going to get there, and what we need to protect, three factors that really define what products will best serve our needs.
When you turn 50 you can count on being bombarded with offers for final expense insurance or burial insurance which begs the question, “Is that what I really need at this age?” Final expense life insurance is permanent insurance. Does that mean we’ve reached the age where term insurance isn’t the right product anymore? It really doesn’t and with the recent introduction of term/ul life insurance, term insurance is available that will extend into a persons 90’s. So let’s talk needs.
In our 50’s and 60’s most of us still haven’t retired. Some of us know when that will happen and what that it will mean to our income when we finally walk out that door the last time. The reason we buy term insurance is that we know how long we need it for and whether replacing our income for our spouse is only necessary for another 5 years or 20 years, the appropriate length of term is still available and affordable. The other good news is, having survived this long, we don’t need as much life insurance as we did when we had to worry about replacing our income for a spouse who was 35 years from retirement and still raising children.
It used to be when we got to our 50’s our mortgages were paid way down or paid off. Now it’s not uncommon for someone 55 years old to enter into a 30 year mortgage. There may be an intent to pay it off quicker but either way there is a definable life insurance need. We know how much and we know how long so again it falls into the term insurance realm. And with the term/ul products available now, if we feel like we need to cover the mortgage for the full length, we can.
Another use for life insurance that most younger individuals might not need or wouldn’t be inclined toward really came to light in the last few years when our retirement portfolios took an enormous hit. During that time my recommendation was to buy 10 year term life insurance to cover the loss until it was recovered. This was a useful tool that a lot of my clients used to give themselves some inexpensive peace of mind.
Now let’s revisit final expense insurance. I believe final expense insurance is a prudent thing to consider. Having said that I think that most “final expense” offerings are a rip off. Time and again I’ve been able to show how, using traditional permanent products, a person can have a $50,000 level premium fully guaranteed product for less than most companies charge for a $15,000 final expense policy. Don’t fall for the no exam, guaranteed issue, too good to be true pitch. You really don’t want to go there.
One more step back and let’s address health changes when we become more seasoned. There is plenty of unwarranted concern that just about any health issue will render us not insurable. The truth is that very few health issues will trump us when it comes to life insurance. Not all agents know how to make that statement come true, so choose an agent that has a track record with and an understanding of your health impairment.
Bottom line. Life insurance over age 50? Well, I’m over 50 and it is an integral part of my financial portfolio. At this age, unlike our kids, we have less time to recover from an untimely death of a spouse. We may or may not need as much insurance to do the job, but we are in a much better place to project those needs accurately.