We’re going to let you in on a secret. A big one.
The life insurance industry is changing, particularly for those in their fifties and beyond.
You, like most individuals shopping for life insurance, probably believe that premiums increase as you age until they become unaffordable. This is partially true: you can and should expect your premiums to increase as you age, as life expectancy decreases and the risk for health complications increases.
However, thanks to breakthroughs and innovations in medical research and technology, life expectancies are much longer than they were decades ago. And they only continue to lengthen.
So: is 50 the new 40? The new 30?
While we cannot speak to those trends, we can tell you that fifty is still young. Barring any severe health complications, individuals at the age of 50 can find affordable term life insurance, with a variety of policy sizes and term lengths. What’s more; both Standard and Preferred ratings aren’t much higher than they are for those who are younger.
Understanding Life Insurance in Your Fifties
Life insurance shopping can be frustrating at any age, and if you hit the fifty mark, there seems to be a fear that surrounds buying a new policy.
Let us first start by saying this: 50 is not old. Are you older than 30? Yes. Are you older than 40? Yes. However, just because you’ve hit the big 5-0 does not mean that you will declined left and right for a life insurance policy.
For an individual in relatively good health, finding affordable life insurance is a three-part process:
- Should you buy life insurance?
- What type of life insurance are you looking for?
- How much life insurance will you need?
Luckily for you, all three of these parts can be easily solved once you find a reputable agent to help you through the process. For the purpose of this article, we are going to focus on the first two questions.
Should You Buy Life Insurance?
Life insurance is generally bought to protect your family and your assets after you pass away.
For those who are still married, it is also designed to replace your income for a set amount of time until your spouse or partner can get back on his or her feet. This income can help pay for funeral expenses, medical bills, mortgages or debts that may not be taken care of before you pass away.
Occasionally, life insurance is used to set up a trust for children or grandkids, or to help pay for your children’s school.
The simple answer to anyone at the age of fifty is: yes. You should buy life insurance.
Your children may be grown by this time, but, chances are, you’re nearing retirement and still have a mortgage. In order to protect your loved ones and the retirement fund of you and your spouse or partner, buying life insurance is always a good idea.
Additionally, should you pass away, you want to make sure your policy will at least cover your final expenses and your medical bills; funerals can be expensive, and you don’t want to leave your loved ones paying out-of-pocket.
Life Insurance Lingo Crash Course
Shopping for life insurance can be a confusing process if you don’t understand the terms that are frequently used in the industry. While some of you may be well-versed in the “life insurance lingo,” we are going to lay out a little refresher course of key terms here:
- Risk class: depending on how big of a risk your health and lifestyle choices present, you will be placed into one of four categories: Preferred, Standard, Substandard or Declined. These classes are assessed by evaluating your health and lifestyle and comparing it to the lifespan of an average adult in the same age range.
- Preferred means that your life expectancy is longer than that of an average individual in your age range. This means you are generally low-risk for insurers. Additionally, the premiums in this category will be the best.
- Standard means that your life expectancy is the same as the average individual’s in your age group. All premiums are set based on this category.
- Substandard risk means that your risk is higher than the average individual’s. Your premiums will be higher than a standard risk class.
- Declined means that your risk was too high for insurers to take on. If you have been declined for coverage, give us a call today.
- Premium: a premium is a set amount you pay in exchange for coverage. Your premium is going to be based on a few things: the size of your death benefit, the type of policy you choose and your rating. Your gender will also play a role in how much you pay for life insurance.
While we are on the topic, let’s take a look at some term life insurance premiums for individuals in your age range:
Life Insurance rates for a 50 year old Male Preferred Non-Smoker (with exam):
Face Amount 10 year 15 year _ 20 year
$250k $30 $39 $50
$500k $54 $72 $92
$750k $81 $106 $137
$1 million $97 $134 $176
Life Insurance rates for a 50 year old Male Standard Non-Smoker (with exam):
Face Amount 10 year 15 year 20 year
$250k $48 $61 $76
$500k $87 $114 $145
$750k $128 $171 $218
$1 million $164 $214 $276
Life Insurance rates for a 50 year old Female Preferred Non-Smoker (with exam)
Face Amount 10 year _ 15 year 20 year
$250k $25 $30 $38
$500k $44 $52 $69
$750k $66 $78 $101
$1 million $79 $99 $129
Life Insurance rates for a 50 year old Female Standard Non-Smoker (with exam)
Face Amount 10 year 15 year 20 year
$250k $37 $47 $59
$500k $66 $87 $112
$750k $98 $128 $165
$1 million $122 $162 $210
- High Risk Insurance refers to a particular type of life insurance, for those individuals who pose a higher risk than average. Certain companies specialize in insuring a variety of risky diseases and conditions.
What Type Of Life Insurance Should You Buy?
Later in this series, we are going to review what types of life insurance will be best for you, no matter what you unique situation may be. For now, we are going to review the various types of life insurance so that you have a basic knowledge once you begin your search.
Term life insurance is life insurance that promises to protect you for a certain time period, or term. These terms can range, from 10 years all the way up to 20 years, although some companies are now offering 25-and-30 year term policies.
Whole Life Insurance refers to life insurance that is designed to protect you for your whole life. This type of policy accrues a cash benefit over time, which may be used to pay off the rest of your premiums or to set up a “trust” for family and loved ones. Because of the cash value and the promise of protection for your whole life, this insurance typically has more expensive premiums than term life insurance.
Guaranteed Issue (No Exam) insurance is life insurance that guarantees protection, no matter your current or future medical state. This type of insurance does not require a medically underwritten exam; however, you can expect the premiums for this insurance to be extremely high, and the death benefit will generally be low.
Now That You’ve Gotten The Basics…
Time to start finding the policy to fit your needs!
Give us a call today so that we can help you get started.