Policy Type
Start by choosing what type of life insurance policy you need. There are many options available, but initially, you’ll need to choose between two main types: term life or permanent life. Both policy types have pros and cons to consider.
Term Life Insurance for People Over 50
Term life insurance offers a locked in rate for a specific period, or “term,” typically between 10 and 30 years. If you pass away during the term, your beneficiaries receive the death benefit. If you outlive the term and don’t choose to renew, the policy expires with no payout. If you decide to renew, expect rates to increase significantly with each renewal.
Term life insurance generally has lower premiums than permanent life insurance, making it more affordable.
Permanent Life Insurance for People Over 50
Permanent life insurance (such as whole life insurance), on the other hand, provides lifelong coverage as long as the premiums are paid. If you pass away at any point while the policy is in force, your beneficiaries receive the death benefit.
Permanent life insurance also generally has a cash value component that grows over time. You can borrow against this cash value, withdraw from it or use it to help pay your premiums. Any outstanding loans from the cash value at your death will reduce the death benefit.
Policy Amount and Coverage
When shopping around for life insurance, you’ll also need to crunch some numbers and determine how much life insurance you need. You should also decide if you want add-on coverage through life insurance riders. These considerations will be based on a few factors, including:
- Debts and liabilities. You should have enough life insurance coverage to ensure your family isn’t financially burdened by debts, such as a mortgage, car loan, college tuition or credit card debt.
- End-of-life expenses. You’ll also need to consider costs associated with end-of-life care and funeral expenses and ensure you have enough coverage to prevent them from financially burdening your loved ones.
- Financial dependents. Consider who relies on you financially, such as a spouse, minor children, adult children with disabilities, or even aging parents.
- Income replacement. If you’re still working and there are people who depend on your income, it’s important to calculate how much money would be needed to replace your income and maintain your family’s current lifestyle.
- Long-term care. It’s becoming increasingly common for older adults to require long-term care, such as a nursing home or assisted living facility. Some life insurance policies offer riders that can help cover these costs.
Financial Stability
When comparing life insurance companies, financial strength and stability of the company is an important factor to consider. You want to make sure the company you choose will be around for the long term and can pay out a claim if necessary. You can check a company’s financial strength rating through independent rating agencies such as AM Best, Standard & Poor’s and Moody’s.
