Best Life Insurance for 58-Year-Olds: Wills vs. Life Insurance Policies: Do You Need Both?

If you are applying for a life insurance policy or planning on renewing your policy in your fifties, you probably have a lot of questions. 

One of the most common questions we get is whether or not a will can suffice in lieu of a life insurance policy. After all, both seemingly perform the same function: to protect your loved ones after you’ve passed away. 

While it may seem redundant to have both a will and a life insurance policy, we find it advantageous to have both. Here’s why: 

Will vs. Life Insurance: Understanding the Difference

A will details how you would like your assets divided in the event of your death. These assets can include your home, valuables as well as provisions for the care of minors after you have passed away. 

The most common form of a will is a testamentary will, which is a formal document drawn and signed in the presence of witnesses. A will can be drawn up by anyone who is of sound mental state, over the age of 18 and who clearly states that the document is your will and testament. 

A life insurance policy works a little bit differently. 

A life insurance policy is essentially a contract with a life insurance company. This contract promises to pay out a sum  of money to your listed beneficiaries. In exchange, you pay out a set premium every month or every year. 

The first primary difference comes in the form of premiums: you do not need to pay premiums in order to draw up a will, although you will most likely have to pay to have the will notarized or for the presence of a lawyer.

The next difference comes in with the assets. 

In a will, anything you deem of value can be left to anyone of your choosing. This includes family heirlooms, jewelry, your property, vehicles or anything you own. 

A life insurance death benefit is simply a sum of money that will be paid to the beneficiary or beneficiaries of your choosing. The breakdown of these benefits and what you pay for their coverage works as follows:

Life Insurance rates for a 58 year old Male Standard Non-Smoker (with exam):
Face Amount 10 year 15 year 20 year
$250k $96 $126 $168
$500k $174 $239 $325
$750k $257 $354 $484
$1 million $327 $449 $631

Life Insurance rates for a 58 year old Female Preferred Non-Smoker (with exam)
Face Amount 10 year 15 year 20 year
$250k $43 $56 $75
$500k $79 $103 $141
$750k $115 $152 $208
$1 million $148 $200 $267

Life Insurance rates for a 58 year old Female Standard Non-Smoker (with exam)
Face Amount 10 year 15 year 20 year
$250k $66 $89 $118
$500k $119 $167 $224
$750k $175 $247 $332
$1 million $216 $308 $415

Essentially, one form of coverage (life insurance) you pay for, and the other you don’t, but the primary difference is that a life insurance policy only provides a lump sum of cash, and does not address the division of your estate details. 

Do You Need Both?

The short answer to this question is yes, you should have both a life insurance policy and a will. A strong financial plan will traditionally include both; however, if you had to choose just one, a life insurance policy is your best choice. 

The reason you should pick life insurance over a will is because life insurance is a contract with a company. You may change your beneficiaries at any time, but – regardless of what a will may state – your death benefit will be paid out to the individual you designate as your beneficiary.   

In a court of law, a life insurance policy is always recognize over a will. For example, if you want to leave everything in your estate to your children after you pass, but your spouse is listed as your life insurance beneficiary, he or she would receive your death benefit. 

This makes constant revision and review necessary for a life insurance policy, particularly if you have an SBA loan or a business is listed as your beneficiary. 

SBA stands for small business administration loans, and are given by the United States Small Business Administration. These are loans used to help fund the startup of a small business. These loans can be used to buy machines, land or real estate and they require a life insurance policy to reduce the risk of lending. 

The life insurance policy is typically taken out with a death benefit the size of the loan, with the government listed as a beneficiary. This way, should you pass away before you can finish paying off your loan, the burden of debt does not get passed on to your family and is, instead, covered by the death benefit. Of course, you should be updating the amount that goes to the government or bank as you pay off portions of your loan over the years.

You may also want to include a life insurance over a will if you have a legacy in the form of a business. Business life insurance is a type of life insurance policy taken out by a business on the majority stakeholder, owner, or an individual without whom the business would stop running.

This type of coverage can be used to cover debts, protect your employees, protect your family from estate taxes and help figure out how your company will survive without you. Additionally, this type of life insurance can be used to decide who will inherit your business.

Once again, a life insurance policy is always recognized over a will, so it is better to have business affairs tied up in a life insurance policy. This way, you help eliminate any confusion or arguments after you’ve passed away.

Flexibility and Coverage

A strong financial plan will incorporate both a will and a life insurance policy. The good news is that both are flexible; your beneficiaries can be changed at any time by contacting an agent and, at any time, you can re-write your will to include further details of your estate. 

If you are still uncertain as to whether or not your unique financial situation requires both documents, give us a call today to see if we can help!