What is the Best Life Insurance for People over 50 Years Old? | Guardian (2023)


Life insurance is critically important for people with young families who rely on their income for support. But as people age, that typically becomes less of an issue. Still, people have financial obligations that continue long after children grow up. And no matter when you die, there will always be final expenses - medical and funeral costs that need to be covered.

While life insurance coverage typically costs more as you age, you can stillapply for a policy later in lifeto help protect loved ones from having to pay your obligations. A life insurance policy can also serve other estate planning and business protection purposes. Here are some things to consider if you're looking for coverage over the age of 50:

  • Whatare the two main types of life insurance policies
  • Factors that affects thelife insurance costs
  • Why you may need life insurance after age 50
  • How to choose the best coverage for your needs

What are the two main types of life insurance, and how do they work?

If you're shopping for life insurance over 50, it's important to understand how each type of life insurance protection works. That's the key to getting the amount of protection you need at an affordable price.

Term life insurance provides coverage for a specific period of time or term - typically between 10 and 30 years. After that term, your insurance coverage is gone, and there's no value or payout. That's why it's sometimes called "pure life insurance," meaning it provides life insurance and nothing more.Term life insurance quotesare generally less expensive than permanent life insurance, which can build cash value (below).1

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You can apply for a new term life insurance policy after the old one expires, but your rates will typically be higher. There may also be an age limit that prohibits you from applying for new coverage. However, many term life insurance policies (including those from Guardian) can be converted to a whole life insurance policy before the term expires - without getting a new medical exam. While the premiums will rise, that may be an option for continuing coverage in later years.

Permanent life insurance is designed to provide coverage that will last your entire life.2Unlike term life insurance, it's not a "pure" insurance product because it includes a wealth-building component – the policy's cash value – which helps make coverage last indefinitely while providing other advantages. A portion of your premium dollars are invested, and your cash value grows tax-deferred over time.3 Cash value is money you can borrow against, use to help pay your premiums or even surrender for cash to supplement your retirement income.4

Because it lasts your entire life, a permanent life insurance policy can also be used as a tax-advantaged estate-planning tool. For these reasons, permanent insurance is more expensive than term for a given death benefit. There are two primary types of permanent coverage:

Whole life insurance provides guaranteed death benefit protection for as long as you live while earning cash value.A whole life insurancepolicy doesn't expire as long as regular premiums are paid. The cash value grows, tax-deferred, at a guaranteed rate, and the premiums never increase. Policies from a mutual life insurance company (such as Guardian) may also provide dividends, which can help cash value grow faster.5

Universal life insurancealsoprovides permanent protection and can earn additional cash value. However, unlike whole life insurance, auniversal life policy can give you added flexibility: you can adjust your monthly payments within a specific range to help better deal with changing work circumstances. That variability also means that cash value growth and the death benefit can fluctuate with universal life insurance - or even lapse if cash value and premiums drop below a certain level.6, 7

Factors that affects the cost of life insurance

The older you are, the higher the costof life insurance coverage. That's why life insurance professionals often encourage people to take out policies in their twenties and thirties. However, if you are in your 50s, there may still be time to get coverage.You just need to be prepared to pay more for coverage and understand thatsome types of policies may no longer be available to you. Here are some of the main factors that contribute to policy cost:

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Your age:Life expectancy has an understandable impact on how much life insurance costs, which is why premiums can go up significantly for applicants over age 50. Life insurance companies have a greater risk of payout as you age; conversely, when you buy at a younger age, even permanent life insurance policies – with a guaranteed payout – cost less because you have a longer time to pay into the policy.

Your health:Younger people, in general, are healthier. As people age, health tends to deteriorate, which puts the life insurance company more at risk of having to pay out on your policy. Smoking and other risky behaviors also impact the cost of life insurance.

Policy length:Term life insurance, which provides temporary coverage, typically costs less than a permanent policy. And shorter-term policies are typically less expensive than longer-term life insurance policies - but you can count on a premium cost increase at renewal.In any case, when you are over age 50, a 30-year term life insurance policy will generally cost more than a 10-year term policy.

Why you may need life insurance after age 50?

Life insurance is designed to help protect those who your death will financially impact, and different types of policies can protect them in different ways. Depending on your situation and needs, there are many reasons to consider getting life insurance above age 50.

1. Family protection.People are starting families later, and many 50-year-olds still have children at home. Life insurance can help provide for lost income, help protect your family from losing your home, help pay your children's way through college, and allow your spouse to take time away from work to care for your family's needs. At age 50 or older, term life will generally be the most affordable option for getting the death benefit needed to help ensure your family is provided for.

2. Coverage for final expenses.These policies are designed specifically to cover funeral and death-related costs, but nothing more. They have a low benefit amount can be affordable, even for those in their 60s and 70s, and they typically don't ask health questions or require a medical exam. Funeral costs often run over $10,000, and there may also be final medical and/or hospice costs after you are gone. A final expense policy can help take these financial burdens off your family - but they won't help replace income for your financial dependents.

3. Business protection.If you own or are a partner in a business, having a business continuity plan in place can be critical to ensure that the business is taken care of. Whole life insurance can help provide the capital needed to buy a deceased owner's interests and protect the business against the loss of a key person's services, expertise, and skills. Life insurance can help address four major areas of business planning:

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  • The funding of buy-sell agreements and stock redemption plans
  • The funding of supplemental retirement programs
  • Key person indemnification
  • Payment of loans and mortgages

4. Pension replacement.If your pension stops when you die, getting life insurance coverage can help cover your spouse's ongoing financial needs.However, term life insurance should typically not be used for this purpose because if you outlive the policy term, there is no protection for your spouse.

5. Estate planning.By planning for the orderly transfer of property after your death, you can help minimize taxes and provide for heirs in a way that reflects your desires. Permanent life (whole or universal) can play a key role by offering:

  • Liquidity to help pay inheritance and estate taxes
  • Assets to help provide income for a surviving spouse and children
  • Estate equalization among heirs
  • Funding for special needs children

Estate tax liabilities can erode a decedent's assets. If there is no plan in place to pay these taxes (for example, by using life insurance proceeds), survivors could end up selling off other assets such as retirement investments or even precious family heirlooms to come up with the money. And unfortunately, when such assets are sold in this manner, it is often far below market value.

6. A charitable remainder trust.If you've built a successful business or investment portfolio, there can be enormous capital gains taxes when those are sold for retirement income. At the same time, you may want to support charitable causes that reflect your interests. Whole life insurance can help do this. With a charitable remainder trust, these two diverse needs can come together in a strategy that helps provide:

  • Lifetime income
  • A charity bequest
  • Potential avoidance of capital gains tax
  • Potential income tax deductions

This can help make it possible to achieve your charitable goals while maintaining a significant legacy for your heirs.

7. Saving for Retirement. As mentioned, permanent life policies build cash value with tax advantages, which can help pay for retirement. For someone close to retirement, adding permanent life to supplement your retirement can be a way to diversify your portfolio.

How to choose the right policy for your life insurance needs?

As you can see from the examples above, there is no single policy that is right for everyone. People have different coverage needs, different budgets, different health statuses, and different goals. There are specialized forms of coverage available, and in some situations, it may even make sense to get two policies:

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If you still have children at home, you probably want a high level of protection but not high life insurance rates. So you may want to consider getting two policies – a smaller permanent policy to cover your spouse's needs for the rest of your life, plus a less-expensive term life insurance policy to provide extra coverage until your children finish school.

If your children are grown and out of your house, you may not need as much coverage, and you may not even be sure how long you need it. So consider getting a smaller term policy with a conversion rider that lets you convert to permanent coverage (if desired) until the end of the policy term. That can help you save compared to the cost of getting permanent coverage when you are older because, with conversion, there are no medical exams or health questions - you pay rates based on your health status when you first took out the policy.

If you have health issues, there are still ways to get coverage. "Simplified issue" policies don't require a medical exam but may ask health questions. "Guaranteed issue" policies don't require a medical exam or health information. Just keep in mind that you will pay more for the same amount of coverage than "medically underwritten" coverage that requires a medical exam.

People who apply for life insurance after age 50 tend to have unique - and sometimes complex - needs. It's a good idea to talk things over with someone who can help you decide what to do. A financial professional can help you determine if term life insurance or permanent coverage is best for your situation and how a policy can be tailored to your needs. If you need help finding such a person, Guardian can connect you to afinancial professionalwho can help.

Frequently asked questions about life insurance

How much is life insurance for a 50-year-old?

The average cost of a $500,000, 20-year term life insurance policy is $71/month for a 50-year old female and $93/month for a male1. However, your actual life insurance premiums will depend on your medical exam results and other factors that vary by policy and company. Also, note that many insurance companies will typically let you convert your term coverage to a permanent policy later on.

Is it worth getting life insurance at 50?

This depends on your situation. While premiums will be higher than they would have been if you had taken out a policy in your thirties or forties, life insurance coverage can still provide affordable protection for your family, your business, and your assets.

What is the oldest age to buy life insurance?

This will vary by product and company. Term policies typically have a maximum age limit, but final expense policies are generally available for any age. They usually pay out around $10,000 to help cover your funeral expenses so that your loved ones do not have to.

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What is the Best Life Insurance for People over 50 Years Old? | Guardian? ›

In general, whole life insurance is usually the best life insurance for people over 50. The coverage and premium typically remain the same throughout the life of the policy as long as premiums are paid, and some plans can accumulate cash value which can be used later in life.

What kind of life insurance should I get at age 50? ›

For most people in their fifties, term life insurance is the best option. It's more affordable than whole life insurance and provides the coverage you need at this stage. If you're healthy and don't have any significant health concerns, you may even be able to get a policy without having to take a medical exam.

What is the best life insurance to get at age 52? ›

Best life insurance companies for people over 50
CompanyFinancial strength rating (AM Best)
AIGA (Excellent)
Mutual of OmahaA+ (Superior)
New York LifeA++ (Superior)
TransamericaA (Excellent)
1 more row

Is it too late to get whole life insurance at 50? ›

If you're in the market for permanent life insurance coverage, you'll find more options in your 50s, as most insurance carriers offer whole and universal life insurance policies to people up to age 80 or 85.

How much is life insurance for a 55 year old? ›

Monthly cost of term life insurance by age
5 more rows
Feb 14, 2023

What is the cash value of a $10000 life insurance policy? ›

The $10,000 refers to the face value of the policy, otherwise known as the death benefit, and does not represent the cash value of life insurance policy. A $10,000 term life insurance policy has no cash value.

Which is better whole life or term life insurance? ›

If you only need life insurance for a relatively short period of time (such as only when you have minor children to raise), term life may be better, as the premiums are more affordable. If you need permanent coverage that lasts your entire life, whole life is likely preferred.

How much is AARP life insurance a month? ›

AARP life insurance rates

We pulled 2021 sample rates using AARP's online quote tool for healthy men and women 50 years and up. AARP only offers coverage for people at least 50 years old. Costs average $156 per month for $100,000 in coverage, depending on factors like your age and health.

At what age should you stop having life insurance? ›

You may no longer need life insurance once you've hit your 60s or 70s. If you're living on a fixed income, cutting the expense could give your budget some breathing room. Make sure to discuss your needs with an insurance agent or a financial advisor before making any major moves.

Can I get life insurance through Social Security? ›

In addition to Social Security's retirement benefits, workers earn life insurance and SSDI protection by making Social Security payroll tax contributions: About 97 percent of people aged 20-49 who worked in jobs covered by Social Security in 2022 earned life insurance protection through Social Security.

What is the best type of life insurance? ›

If budgeting is your biggest concern, term life insurance may be the best choice. If you have many dependents, whole life insurance may be a better route. However, if financial planning and cash value are most important to you, universal life insurance may be a strong option.

Can you have 2 life insurance policies? ›

Yes, you can have more than one life insurance policy at a time. While many people receive enough protection with one policy, obtaining multiple life insurance policies can be beneficial after certain life events, as part of your estate planning, and other situations.

How much life insurance should a person have? ›

Most insurance companies say a reasonable amount for life insurance is at least 10 times the amount of annual salary. If you multiply an annual salary of $50,000 by 10, for instance, you'd opt for $500,000 in coverage. Some recommend adding an additional $100,000 in coverage per child above the 10x amount.

How much a month is a $500 000 whole life insurance policy? ›

Frequently asked questions. How much does whole life insurance cost? A 35-year-old with minimal health conditions can pay about $571 per month for a whole life insurance policy with a $500,000 death benefit coverage amount. Whole life is significantly more expensive than term life insurance on average.

Do you pay taxes on life insurance? ›

Life insurance payouts generally aren't subject to income taxes or estate taxes.

What is the cash value of a 250000 life insurance policy? ›

In a universal life policy, it may reduce the death benefit on a dollar-for-dollar basis. For example, if you have a $250,000 policy and withdraw $25,000, your beneficiaries will only receive a $225,000 death benefit from your policy.

How much does a $1 million dollar whole life insurance policy cost? ›

The cost of a $1 million life insurance policy for a 10-year term is $32.05 per month on average. If you prefer a 20-year plan, you'll pay an average monthly premium of $46.65. In addition to term length, factors such as your age, health condition or tobacco usage may affect your rates.

What is the downside of cash value life insurance? ›

Cash value life insurance is more expensive than term life insurance. Unlike term life insurance, cash value insurance policies don't expire after a specific number of years. You may borrow against a cash value life insurance policy. You may also withdraw cash from the policy, but this will reduce the death benefit.

Can you cash out life insurance before death? ›

Can you cash out a life insurance policy before death? If you have a permanent life insurance policy, then yes, you can take cash out before your death.

What is the downside to term life insurance? ›

While term is often the cheapest form of life insurance, there are some negatives to buying coverage. The policy doesn't build cash value, has no surrender amount if you cancel, and, if you have to renew, your premium is adjusted based on your current age and health, which can mean much higher rates.

What are 2 disadvantages of whole life insurance? ›

Pros and cons of whole life insurance at a glance
Permanent protection that lasts your entire lifeSignificantly more expensive than term life
Premiums never increaseBest to take out when younger for more affordable premiums
The death benefit will not decreaseYour protection needs may change as your life changes
5 more rows

What are the disadvantages of term life insurance? ›

Can be expensive to purchase a new policy at the end of the term, as insurance costs typically increase with age. If your health declines, you may not be able to get another policy after your term ends. Term life does not have cash value that can be tapped into while you're still alive.

Why is AARP life insurance so expensive? ›

AARP life insurance products

All of their policies are either simplified issue or guaranteed acceptance, meaning there are no medical exams and coverage is issued very quickly. The downside to this is that insurers assume applicants are at higher risk and, therefore, charge significantly more costly premiums.

At what age does AARP term life insurance end? ›

AARP's Level Benefit Term Life Insurance is available to AARP members ages 50 to 74 and lasts until age 80.

What is the least expensive form of life insurance? ›

The cheapest type of life insurance is term life insurance. It is the most straightforward and affordable form of coverage. However, it is only in force for a certain period. If you want guaranteed death benefit coverage for a lifetime, whole life insurance is a better choice.

What happens when you outlive your term life insurance? ›

Your coverage ends if you outlive your term life policy. Before it expires, you can choose to convert your policy to permanent insurance, buy a new policy, or go without coverage.

What is the most common age to buy life insurance? ›

Young adults aged 18 to 34 are the most likely to buy life insurance, followed by 35- to 44-year-olds. This may be because young adults are starting families and want to ensure their loved ones are cared for financially if they die prematurely.

How do I get the $16728 Social Security bonus? ›

To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.

What is the highest Social Security payment? ›

In 2023, the average senior on Social Security collects $1,827 a month. But you may be eligible for a lot more money than that. In fact, some seniors this year are looking at a monthly benefit of $4,555, which is the maximum Social Security will pay. Here's how to score a benefit that high.

What life insurance covers everything? ›

As a type of permanent life insurance, whole life insurance provides coverage for your entire lifetime, paying your benefit no matter when you pass away — as long as you keep paying your bill. Whole life insurance also includes a savings component that a portion of your premium will pay into.

What is the most important insurance to have? ›

Most experts agree that life, health, long-term disability, and auto insurance are the four types of insurance you must have.

What are four 4 factors you should consider when buying life insurance? ›

4 factors to consider when buying life insurance
  • How much life insurance do you need?
  • How much can you afford to pay?
  • Which type of life insurance should you get?
  • Who will you list as beneficiaries?
Jan 17, 2023

Can you cash out a whole life insurance policy? ›

Generally, you can withdraw a limited amount of cash from your whole life insurance policy. In fact, a whole life insurance cash-value withdrawal up to your policy basis, which is the amount of premiums you've paid into the policy, is typically non-taxable.

Can you get a life insurance policy on someone without them knowing? ›

No, you cannot buy life insurance on another person without their knowledge or consent, even if they are your parent. As the insured party, your parent may need to undergo a medical examination to determine what coverage they qualify for, the death benefit, and the premium.

What is the maximum amount of life insurance I can get? ›

For people age 18 to 40, for example, life insurance coverage is usually limited to 25 to 35 times your annual income. For people age 41 to 60, the limit is 15 to 25 times your annual income — and for people age 61 to 80, it's five to 10 times your income.

Is $100 000 enough for life insurance? ›

A $100,000 [term life insurance policy](https://www.moneygeek.com/insurance/life/term-life-insurance/) is sufficient if you already have enough savings, have few financial obligations or owe little debt. It is also sufficient if you're only looking for your insurance to cover funeral costs or other specific expenses.

Is $25,000 enough life insurance? ›

A $25,000 life insurance policy is not that much coverage, but it may be enough to cover funeral costs, credit card bills, or other outstanding debts. Plus, a $25K policy will not cost much, and you most likely can get it without taking a medical exam.

What is the average payout for a life insurance policy? ›

This is a difficult question to answer because so many variables are involved, including the type of life insurance policy, the age and health of the insured person, and the death benefit. However, some industry experts estimate that the average payout for a life insurance policy is between $10,000 and $50,000.

How much is a $5 million life insurance policy? ›

5 Million Life Insurance Policy Cost

Term life insurance policy is the most popular. This type of life insurance makes it much more affordable to get high levels of death benefits. The average 5 million term life insurance cost could be $190 per month or $2,280 per year.

How much a month is a $50000 life insurance policy? ›

A $50,000 life insurance policy costs around $7.63 per month for a 36 year old female in excellent health looking at a 10 year term and $9.21 per month for a male in excellent health looking for the same coverage. The term length you choose and your current health can also affect your rates.

How much is a $500,000 dollar life insurance policy? ›

The average cost of its $500,000 life insurance policy is $21.22 per month.

Can creditors go after life insurance? ›

Insurance regulations prevent creditors from taking the life insurance death benefit from your beneficiaries even if you have outstanding debts. Only the people listed in your policy can receive a payout, so life insurance companies won't pay out to an unlisted creditor.

How much money can you inherit without having to pay taxes on it? ›

According to the Internal Revenue Service (IRS), federal estate tax returns are only required for estates with values exceeding $12.06 million in 2022 (rising to $12.92 million in 2023). If the estate passes to the spouse of the deceased person, no estate tax is assessed.318 Taxes for 2022 are paid in 2023.

Is inherited money taxable? ›

Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property. However, any subsequent earnings on the inherited assets are taxable, unless it comes from a tax-free source.

How much cash is a $100 000 life insurance policy worth? ›

The cash value of your settlement will depend on all the other factors mentioned above. A typical life settlement is worth around 20% of your policy value, but can range from 10-25%. So for a 100,000 dollar policy, you would be looking at anywhere from 10,000 to 25,000 dollars.

How long does it take to build cash value in life insurance? ›

How fast does cash value build in life insurance? Most permanent life insurance policies begin to accrue cash value in 2 to 5 years. However, it can take decades to see significant cash value accumulation. Consult a licensed insurance agent to understand the policy's cash value projections before applying.

At what age is life insurance worth it? ›

Generally, the younger and healthier you are when buying life insurance, the more money you'll save. As we age, we're at increased risk of developing health conditions, which can result in higher mortality rates and higher life insurance rates. You'll typically pay less for life insurance at age 25 than at age 40.

Should I get life insurance before I turn 50? ›

When you secure coverage while you are healthy, you can provide greater protection for your loved ones at a much lower cost than if you wait until you are older. It saves money to buy coverage at age 49 vs. age 50, especially if you are a male and/or have health issues.

How much is AARP life insurance? ›

AARP life insurance rates

We pulled 2021 sample rates using AARP's online quote tool for healthy men and women 50 years and up. AARP only offers coverage for people at least 50 years old. Costs average $156 per month for $100,000 in coverage, depending on factors like your age and health.

How much is a life insurance policy per month? ›

The average cost of a life insurance policy ranges from $40 to $55 per month. The true cost varies by the type of insurance, coverage amount, and personal factors. Permanent insurance tends to be more expensive than term life insurance and is used differently. Check out our guide to the best life insurance companies.

How many life insurance policies can I have? ›

There are no limits on how many life insurance policies you may own, and there are some situations where holding multiple life insurance policies may help you plan for your financial future.

Who does not need life insurance? ›

The majority of individuals who are single, financially independent, have no dependents, and do not own a business, do not need life insurance.

What is better 401k or life insurance? ›

In comparison to life insurance, 401(k) has a stronger savings potential. The investment earnings may compound over time. Additionally, some companies match employee contributions, helping you save more for retirement. One component of permanent life insurance is the cash value.


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