Am I Too Old To Be Buying Life Insurance?

Purchasing life insurance when certain life events pop up can be a no-brainer for some. It’s a financial investment and it offers security that your loved ones (and you) will have protection, even long after you have passed away.

What if, later in life, you realize that you had a need for life insurance all along? You have adult children, grandchildren, or even great nieces and nephews whom you would like a sizeable payout dedicated to upon your death. Is it now too late to be buying life insurance? At what age are you “too old” and life insurance is no longer considered “worth it?”

In this article, we plan to go over some of the reasons why someone might be looking to purchase life insurance at an older age, what their options could end up being, and how life insurance can look when purchased when you’re over 50.

What are some reasons to purchase life insurance after 50?

When you’re younger, purchasing life insurance at a younger age might just make sense. You’ve gotten married – OK, time to invest in the life insurance policy. You’re planning to have kids or expecting your first – OK, time to invest in a life insurance policy. Life insurance, at any age, is not designed to replace you. Nothing can do that. It’s just a fact of life.

However, life insurance can be used to replace a portion or all of your earned income upon your death. In your later years, it’s expected that you probably don’t have any ongoing debts, your mortgage is paid off, and your children might be adults who are financially independent.

Situations are very different for everyone, and everyone walks the walk of life in their own unique fashion. The following situations might call for purchasing life insurance in your later years:

Having dependents

Too often, people will conflate having children with having dependents. We want to clear this up by saying that your dependents are not always your children! Sometimes, it’s a surviving spouse, a close relative, a niece/nephew, or even an elderly parent! What would happen to that dependent if you were to die unexpectedly, and they lost your support? Purchasing life insurance could be a solution.

Having debts

Tuition costs are increasing. Housing costs are increasing. Maybe 20, 30, or 40 years ago it would have made sense that anyone in their 50s or later would have paid off all their debts, but it’s becoming increasingly common for families to still be paying off obligations later in life. If you have ongoing debts and your friend, sibling, parent, or spouse is a co-signer, they will be saddled with your debt. Life insurance can help to cover these payments.

Covering funeral expenses

Did you know that funerals in Canada can cost anywhere between $7,000 to up to $25,000? That’s no small price to pay, and unfortunately it’s not a price you’ll be around to help pay off. Planning in advance for funeral costs is a good way to relieve the burden from your loved ones.

Boosting retirement portfolio

Many later-in-life life policies will offer a built-in investment portfolio, sometimes just referred to as a cash value. The policy value tends to grow with time but typically at a fixed rate. Other than being a source for a tax-free retirement income, this an help to boost your investment portfolios. The stable growth can sever as protection from volatility during market turndowns and allow you to pursue other high-return but higher-risk strategies.

Preserving estate value

For individuals in their 50s or later, life insurance can be viewed as a key component of estate planning and help people looking to preserve their estate’s value for their dependents. Proceeds from your own policy can allow you to offset expenses like estate taxes, which would otherwise erode the value of the inheritance you’d want to leave to your heirs.

These are only a few reasons why someone might want to purchase life insurance in their 50s or later. But, with a later-in-life purchase of a life insurance policy, you should know just what type of policy you should choose and what the costs might be. We’ll get into that in the section beneath.

What type of life insurance policy do I need and what does it cost?

In your post 50s years, what type of life insurance policy makes sense to purchase – term or permanent? Term life insurance offers coverage for only a set number of years or until a specific age, after which point it will expire and your beneficiaries will receive no death benefit. If you die during this term due to a covered cause, they will receive payout. Term policies can be up to 10x cheaper than permanent life insurance policies but do not have a cash value component.

Permanent life insurance policies cover you for the entirety of your lifetime and accumulate a cash value, which is designed to grow over a period of time on a tax-deferred basis. The use of the policy is for you and you can use it during your lifetime how you want. The coverage amount would be received by your beneficiaries upon your death.

Health insurance is another option, but health insurance won’t do anything to protect your beneficiaries upon your death. For the most part, it’s an aid in covering everyday health needs, medical emergencies, and drug/dental costs. It can also be used to supplement a life insurance policy.

So, which do you need? Well, it depends on your current budget and financial needs. Term life insurance is the option for most people, but permanent life insurance could be a good idea if you have financial needs which don’t have an expiry date, such as having a lifelong dependent or the need to leave a legacy behind for your heirs to inherit. Most often, high-net-worth individuals will benefit the most from permanent life insurance policies.

What does life insurance cost for someone in their 50s or later?

Age is the single biggest determining factor when it comes to gauging life insurance costs. Statistically, the younger that you are, the less likely you are to encounter health issues or die unexpectedly. Other things like gender, health conditions, smoking status, medical history, and occupation can also play a role in your total costs.

As you might expect, purchasing life insurance when you’re in your 50s or older can mean you’ll pay a lot more for your insurance. You may be labelled as a high-risk individual for life insurance. You’ll need to brace yourself for a higher life insurance premium, unfortunately, as the average healthy 50-year-old individual may pay between $75-$100/month for a 20-year term policy. Females will pay significantly less than males.

Also remember that permanent policies can cost 6-10x more than term policies.

Get in touch with an Excalibur Defender for the best ways to reduce your rates. Your life insurance costs don’t have to burn a hole in your wallet! We’ll give you all the best tips on how to reduce your over 50s life insurance costs, including healthy habits and shopping around.