What Type of Life Insurance is Best for Over 50s?

According to LIMRA, nearly 60% of U.S. adults own some form of life insurance, but as we age, our needs change. Finding out what type of life insurance is best for over 50s involves evaluating your current financial goals and long-term legacy plans.

Quick Summary

The best life insurance for those over 50 is not a one-size-fits-all solution, but a strategic choice based on individual financial needs, health status, and goals. Options range from affordable term policies for specific obligations to permanent whole or final expense insurance for lifelong coverage and legacy planning.

Key Points

• Term Life is for Temporary Needs: If you only need coverage for a set period, like until your mortgage is paid, term life is the most affordable option.

• Whole Life is for Lifelong Security: A whole life policy provides permanent coverage with a guaranteed death benefit and a cash value component, making it ideal for legacy planning.

• Final Expense Covers End-of-Life Costs: For those with health issues or focused on funeral costs, a smaller, easier-to-get final expense policy is a practical choice.

• Health Impacts Premiums: The younger and healthier you are, the lower your premiums will be, especially for medically underwritten policies.

• Guaranteed Issue is a Last Resort: Guaranteed issue policies, while offering guaranteed acceptance, have higher premiums, lower payouts, and waiting periods, making them suitable only when other options are unavailable.

• Financial Goals Determine the Best Fit: Your ultimate choice should be based on your specific needs—whether it's income replacement, covering final costs, or leaving a legacy.

Understanding Your Life Insurance Needs Over 50

As you reach and pass the age of 50, your life insurance needs often shift. The high-dollar coverage required to replace income for young children and pay off a large mortgage may no longer be the priority. Instead, you might focus on covering final expenses, protecting a surviving spouse, or leaving a financial legacy for your heirs. Whatever your goals, understanding the available types of life insurance is the first step toward making an informed decision.

Comparing Life Insurance Options for Individuals Over 50

Several types of life insurance cater to the needs of older adults, each with distinct features, costs, and benefits.

Term Life Insurance

Term life insurance provides coverage for a specific period, or “term,” typically ranging from 10 to 30 years. If you pass away during the term, your beneficiaries receive a death benefit. It is generally the most affordable option, especially if you are in good health when you apply.

• Who it's best for: Healthy individuals who want to cover a specific financial obligation, such as a mortgage, that will be paid off within a set timeframe. It's a temporary solution for temporary needs.
• Pros: Lower premiums, high coverage amounts available.
• Cons: The policy expires at the end of the term, leaving you without coverage unless you can afford a new, much more expensive policy.

Whole Life Insurance

Whole life is a form of permanent insurance that covers you for your entire life, provided you pay the premiums. In addition to a guaranteed death benefit, a whole life policy includes a cash value component that grows tax-deferred over time. You can borrow against or withdraw from this cash value for any purpose.

• Who it's best for: Individuals who want lifelong coverage, a guaranteed payout, and a savings component. Ideal for estate planning or leaving a legacy.
• Pros: Guaranteed coverage for life, fixed premiums, cash value growth.
• Cons: Significantly more expensive than term life insurance.

Universal Life Insurance

Universal life is another permanent policy that offers more flexibility than whole life. Policyholders can often adjust premium payments and death benefit amounts within certain limits, depending on the policy's cash value performance. Like whole life, it has a tax-deferred cash value component.

• Who it's best for: Those who need permanent coverage but desire flexibility in their payments.
• Pros: Flexible premiums, potential for higher cash value growth depending on the policy.
• Cons: Cash value growth is not always guaranteed, and the policy can lapse if not properly managed.

Final Expense (Burial) Insurance

Final expense insurance is a small whole life policy designed specifically to cover end-of-life costs, such as funerals, medical bills, and other debts. It is typically guaranteed issue or simplified issue, meaning there is no medical exam required.

• Who it's best for: Individuals with significant health issues who may not qualify for a traditional policy and want to relieve their loved ones of the financial burden of final expenses.
• Pros: Guaranteed acceptance (with a waiting period), no medical exam, lower coverage amounts mean lower premiums.
• Cons: The death benefit is small ($5,000–$25,000), and there's often a two-year waiting period for non-accidental death benefits.

Guaranteed Issue Life Insurance

This is a specific type of final expense whole life insurance where acceptance is guaranteed for applicants within a certain age range, typically 50-80. No medical exam or health questions are required, making it a last-resort option for those who cannot get approved for other policies.

• Pros: Guaranteed approval, no medical questions.
• Cons: High premiums, low coverage amounts, and a two-to-three-year waiting period before the full death benefit is paid out.

How to Choose the Best Policy for Your Needs Over 50

Determining what type of life insurance is best for over 50s requires a careful review of your situation. Here’s a step-by-step guide:

1. Evaluate Your Financial Obligations: Consider any debts that would outlive you, such as a mortgage, credit card debt, or other loans. Also, think about ongoing expenses for a surviving spouse.
2. Consider Your Health: Your current health is a major factor. If you are in good health, a medically underwritten policy (term or whole) will offer the best rates. If you have significant health issues, a guaranteed issue policy may be your only option.
3. Define Your Time Horizon: Do you need coverage for a specific period, or for the rest of your life? If you have temporary needs (e.g., covering a mortgage), a term policy might suffice. For lifelong coverage and a guaranteed legacy, a permanent policy is better.
4. Assess Your Budget: How much can you comfortably pay in premiums? Whole and universal policies are significantly more expensive but offer more benefits and lifelong coverage. Term and final expense policies are more budget-friendly.
5. Think About Legacy and Estate Planning: If your goal is to leave a financial gift to your heirs or cover potential estate taxes, a permanent policy with a higher death benefit is the ideal choice.
6. Seek Professional Advice: An independent insurance agent can help you compare options from multiple carriers and find the policy that best fits your individual circumstances.

Comparison Table: Term vs. Whole vs. Final Expense

Feature	Term Life Insurance	Whole Life Insurance	Final Expense Insurance
Coverage Period	Specific term (e.g., 10, 20, 30 years)	Your entire life	Your entire life
Premiums	Generally lower; increase at renewal	Fixed for the life of the policy	Fixed for the life of the policy
Cash Value	No	Accumulates tax-deferred	Accumulates tax-deferred
Medical Exam	Often required for best rates	Often required for best rates	Not required (simplified or guaranteed issue)
Primary Purpose	Income replacement, debt coverage for a set period	Lifelong protection, legacy, cash value	Covering end-of-life expenses
Typical Coverage	High ($100k-$1M+)	High ($50k-$1M+)	Small ($5k-$25k)

Conclusion: Making the Right Decision for Your Future

Ultimately, the best life insurance for over 50s is the one that aligns perfectly with your individual circumstances and financial objectives. For those in good health and seeking high, affordable coverage for a defined period, term life insurance is an excellent choice. If you prioritize lifelong protection, building cash value, and leaving a guaranteed legacy, a whole life policy may be worth the higher premiums. For individuals with health concerns or focused solely on covering final expenses, final expense or guaranteed issue policies offer a simple, accessible solution. Remember to reassess your needs regularly and get quotes from multiple providers to secure the best policy for your situation. To further educate yourself on financial planning as you age, you can find valuable resources from authoritative sources like the Consumer Financial Protection Bureau.

Frequently Asked Questions

Is it harder to get life insurance after turning 50?

Life insurance premiums generally increase with age, and it may be more difficult to get a long-term policy without a medical exam. However, many options are available, and certain types of policies, like guaranteed issue, offer acceptance regardless of health.

What is the difference between final expense and whole life insurance?

Final expense is a type of whole life policy with a smaller death benefit, usually designed just to cover funeral costs. Traditional whole life offers a much larger death benefit and builds a more substantial cash value.

Can I convert my term life policy to a permanent one?

Many term life policies offer a conversion option, allowing you to switch to a whole or universal life policy. This can be very beneficial if your health declines and you want lifelong coverage without a new medical exam.

How much life insurance do people over 50 need?

The amount varies based on individual circumstances. Unlike younger adults who need to replace income, those over 50 often focus on covering specific debts, providing for a surviving spouse, or covering final expenses. A financial advisor can help you calculate your needs.

Does having a pre-existing medical condition prevent me from getting coverage?

Not necessarily. While it may increase your premiums for a traditional policy, options like simplified issue (health questionnaire only) and guaranteed issue (no health questions) are available, though they come with higher costs and lower benefits.

Are guaranteed issue policies a good option?

Guaranteed issue policies are a suitable choice only if you have health issues that prevent you from qualifying for other, more affordable policies. The premiums are higher, and there is a waiting period for the full death benefit to be paid.

Can I have more than one life insurance policy?

Yes, you can have multiple life insurance policies. Many people use this strategy, such as having a term policy for a large debt and a smaller final expense policy for burial costs.