As you start to approach retirement, you will need to assess your current situation and your needs for life insurance.
When you are younger, you will need a very distinct plan to protect your spouse and your children if you pass away.
When you are 50 years of age or older, you will need an entirely new plan and possibly an entirely new life insurance policy. The following guide will help you assess your needs based on your goals and your age so that you make the right decision when you buy a new policy or replace an existing one.
Assessing Your Current and Future Life Insurance Needs
When you are in your 20’s and 30’s, you must plan for a much larger span of time when buying life insurance. Not only must you select a death benefit that covers your mortgage balance and your debt, you also must buy a policy that will provide money to pay for your child’s schooling and the tuition expenses for children you might be planning to have in the future. As you start to age, your life changes and many of these concerns are no longer an issue. Depending on how old you were when you had your children, your little ones may now be self-sufficient adults who have already earned their degree. If you purchased your home when you were young, your mortgage may be paid off or close to being paid off.
Because your financial obligations usually start to shrink as you approach retirement, you may be able to reduce the death benefit that you carry when you buy term life insurance in your 50’s. Now is the best time to assess both your current needs and your future needs and how these align with your coverage so that you can build the best life insurance plan. Here are some very important questions that you should ask yourself when you are selecting a death benefit:
- Do you want to provide your family with money to pay for your funeral expenses? If so, how much?
- Do you own real estate? What is the balance, if any, on your mortgage loans?
- Do you have children or grandchildren that you want to provide money for school? What is the average cost of tuition to earn a degree at the time?
- Are you married? Would you life to provide money for long-term care for your spouse if they outlive you?
- Are you currently employed? Would you like to provide replacement income for a specified number of years?
- Would you like to leave your children or other family members an inheritance to build a legacy?
What Type of Insurance Should You Buy?
There are two very different types of life insurance that you can purchase: term or permanent life insurance. While each of these policies will pay a death benefit to beneficiaries, the way the policies are setup are much different. A permanent life insurance plan comes with much higher premiums because the plan is valid for the remainder of the policyholder’s life. A term life plan is more affordable because it will lasts for a specified period of time, typically between 10 or 30 years. When you are in your 50’s, it makes much more sense to purchase a term policy to cover your temporary needs and a permanent policy to cover your final expenses or to leave an inheritance.
Your Health and Life Insurance
Most of the top rated life insurance companies require applicants to pass a medical exam to qualify for coverage. This exam, combined with your medical history, will help the company determine how much of a risk you pose.
If you are in poor health in your 50’s, you may want to consider applying with a company that specializes in approving people with your condition. If you are in good health, it makes more sense to apply for a plan and take the full physical exam that is required to keep your premiums reasonable.
Finally, if you are having problems getting coverage you may look at a policy that does not require a medical examination. You will pay a little more than you would if you were able to be approved with a standard policy, but this is a great option for anyone having a hard time getting through the underwriting process.
If you are not sure how much life insurance you need, speak with a licensed life agent. After you determine how much coverage is adequate for today and in the future, start comparing quotes and choose the policy that offers you quality coverage at a competitive rate.