Is Life Insurance Worth It at My Age?
As you age, there are many important financial considerations you may need to make in your life. For example, you may find yourself asking if you need life insurance or if this policy option is a waste of time for you at your age. Is life insurance worth it once you hit age thresholds like 40 or 50? This fact is fundamental to consider because it may end up impacting your bottom line.
Thankfully, we can help you with this decision by going over the various pros and cons of buying life insurance at multiple ages. We'll highlight whether life insurance is a great choice early in your life, later as you age past 50, and what factors you need to consider when deciding on either policy option. In this way, you should get the best experience possible for your needs and avoid unnecessary financial burdens.
Is Life Insurance Worth It After 50? Let's Find Out
The general rule of thumb regarding life insurance is that it's a young person's game. You see this in many articles online: this Forbes article is literally about why you should buy life insurance when you are young. And these articles all raise excellent points. Life insurance is definitely a better investment option when you are young, even if your risk of death is much lower at these early ages.
Why is that the case? First, let's break down each of these factors to understand better why people generally buy life insurance in their mid-20s and 30s. Then, we'll examine why people might want to buy a new policy after they hit 50. This information is critical to understand and should provide you with the advanced knowledge that you need when making these critical investment decisions.
Why Life Insurance Is a Great Investment When Young
So, why is life insurance a great choice when you're young and less likely (statistically) to die? Well, insurance is kind of a funny thing in that way. Often, insurance is more expensive for those people who need it more. So, for example, as you age, your policy is likely to increase in premium costs because you're more likely to pass away, and your company is more likely to pay out their policy.
After all, insurance companies make money when they do not pay out versus when they do. They get money from consumers who regularly pay their premiums and lose money when they pay out on a policy.
As a result, a consumer with a higher risk (aka an older individual more likely to pass away) is a more significant financial drain. Accordingly, their premium goes up to cover this higher risk.
Just How Much Can This Change?
What may shock you is just how much your policy premiums may go up as you age. For example, our research indicated that a 20-year old might buy the same policy as a 40-year old and pay half what the older individual does every year. The terms can be identical, and the payout precisely the same, but the policy premiums go up simply because the 40-year-old person has much more life behind them.
Beyond that factor, insurance companies also examine things like a young person's financial vulnerability. In a few situations, younger adults are far less likely to have substantial savings and disposable income than older people. Just think of it in this way: a 24-year-old just out of college is likely only beginning their career or a few years into it at that point in their life.
By contrast, a 40-year-old who started their career at the same 24-year range already has 16 years of work experience. They may have been paying into retirement packages, 401(K) funds, or even investing in various stocks and bonds. As a result, insurance companies feel more comfortable charging more for people as they hit this age because they're more likely to afford it.
Other Reasons Why You Should Start Early
There are many obvious reasons why starting your life insurance policy young is a better idea. While we still think it's a good idea to buy life insurance when you're older, purchasing a policy when you're younger can provide you with a multitude of apparent advantages, including:
Better Health Quotient
Insurance companies gauge what they call your health quotient. This measurement measures your overall health and helps them decide on your policy costs. For example, younger people typically have higher health quotients, meaning that they'll likely pay less. A higher health quotient may also mean you can bypass all required health exams before getting a policy for your needs.
Compounding Costs
The other exciting thing about buying a policy young is that it may increase its value over time. Life insurance policies compound as you age, which can increase your returns. This factor can grow exponentially over time. For example, eight percent returns will build more quickly over time and create a higher value for your policy when you buy younger.
Protection for Dependents
Many people in their 20s and 30s are just starting a family and may have many young children. What happens when these individuals pass away, and their dependents have no more financial support? If you have life insurance, these individuals will get financial protection. In addition, these policies may pay for dependants to transition to stronger overall financial health.
Protect Against Lost Income
If you're married and your partner does not work or has sacrificed their career for yours, they're going to be in a very tough position if you pass away at a young age. While they'll also have the chance to rebound if they're also young, a life insurance policy can protect them when you pass and ensure that they get a source of income to stay safe financially.
These benefits all make life insurance a fantastic investment during your early adult years.
It may even work perfectly for people in their 40s and provide many wonderful benefits. That said, you still get many benefits when buying life insurance after 50. Let's break these down in the following section to understand better when a policy works well for you.
Should You Get Life Insurance After 50? Yes! Here's Why
Whether you just turned 50 or are well into your fifth decade, the debate about health insurance can be pretty intense. Many people will tell you a policy is not worth your time, while others will say you can't do without one. So, where do we fall on this range of opinions? If you read the heading of this section, you probably can guess that we think that life insurance is usually an excellent option for most people.
But why is that the case? And are there any limitations you need to consider when buying a policy? Let's take a deep dive into these topics to help you come out ahead. We'll start by listing the top reasons why a life insurance policy is a great option even into your 50s. Then, we'll define a few crucial things that you can't ignore if you're interested in one of these policies for your needs.
Reasons Why You Need Life Insurance
If you're over 50, you might need life insurance for many different reasons. Understanding these factors may make it easier for you to make a purchasing decision. Just a few reasons that you may want to consider life insurance even as you age towards 60 and beyond include:
Protect Against Funeral Costs
Funeral costs can be costly, even if you've saved up a decent amount of money over the years. You don't want your family to pay the thousands of dollars required by this burial. As a result, you may want to get a life insurance policy, even after 50, to protect your loved ones and minimize their financial investment issues.
Pay Off Family Debts
Do your adult children have any debts holding them down, such as a mortgage or student loan payments? Pay off these debts with your life insurance to protect their needs. These payments will cover a surprising amount of your loved one's debt. Even if you don't pay for all of it, paying for most will be a significant benefit.
Help Your Grandchildren
If you want your grandchildren to struggle less than you and your children did, make them the beneficiaries of your life insurance. You can funnel your payments into a simple series of bonds that can mature as your grandchildren age. In this way, they can pay for school or even retire young and enjoy their life more fully than expected.
Provide for Your Favorite Charity
Charities can help pay for many different expenses and costs for a broad range of individuals. For example, you can pay for an animal-based charity if you're vegan or support similar causes. And if you don't have any family members to help out with your life insurance policy, you can give all of your payouts to your favorite charity to help them out.
These benefits make life insurance a fantastic option for people in their 50s. Even if your children are adults and you have grandchildren, a little extra money is never a bad thing. That said, there are various things that you need to consider when buying any life insurance policy at this age.
Factors to Consider
If you plan on buying a life insurance policy in your 50s or 60s, you need to consider a few different factors. These elements may vary depending on your financial situation, your family's needs, and many other factors. As you reach these mature years, you may also need to adjust your policy type to ensure that you're satisfied with your options. Just a few things to consider here include:
Life insurance comes in two different types: permanent and term. Permanent policies last for your whole life and can provide a small cash benefit even while you're alive. Term policies typically last between 10-30 years and cost less. Older adults may do just fine with a term policy because they are less expensive, and they're not likely to outlive the terms of their policy.
Do you want to buy a comprehensive policy with a high payout? You're going to have to spend more money on your premiums. If you're older and have limited financial freedom, you may find it impossible to get the large payout you want. That said, you can usually find a company willing to work with your needs if you're careful about how you handle this situation.
Your life insurance premiums may be paid monthly, semi-annually, quarterly, or yearly. If you can pay all of your costs at once, your policy company will likely give you a significant discount: sometimes as much as 40%. This option is an excellent choice for older adults who have a nice chunk of retirement money and minimal expenses, such as those who've paid off houses and cars.
Interestingly, you can also purchase a unit-linked policy that provides customized payments, insurance, and premium costs. Typically, this option also lets you invest in things like stocks and bonds. When you're an older adult, this option may be great if you're trying to find an alternative income source for your children or grandchildren.
If you set up an endowment plan, you can double the benefit of your life insurance and savings by guaranteeing a minimum sum at maturity. It may also provide various benefits for your family or loved ones when you pass. The only downside is the highest cost, but if you have the financial freedom to pay for this plan, it is an excellent option for older adults.
These factors can dictate what kind of policy makes the most sense for your needs. Rather than relying on the luck of the draw or trying to get a policy without help, you can work with your insurance company to get the best experience possible for your needs. Just as significantly, you can minimize your financial difficulties by working with a lender or other capital investment firm.
What To Do If You Can't Afford Life Insurance
If you find yourself struggling to afford life insurance later in life, there are a few steps you can take here.
First, you might be able to find grants that will help pay for this policy. These government grants require you to apply to them and get approved. However, they may help provide a one-time policy payment that covers your needs or yearly expenses that help to cover your life insurance needs.
However, these grants are often highly sought and very competitive. As a result, many people may find that they cannot identify one that suits their needs. In this situation, you may be more likely to seek out a low-cost loan or lending option that could help you in this situation. Many lenders will provide affordable loans to older adults for any reason, including very reasonable interest rates.
Thankfully, we can help you out in this situation! At Goalry, we can help consumers identify high-quality lending options that meet their needs as people. For instance, you can download our app, set up a free profile, and search through various senior-friendly lending options. Our app lets you sort these lenders out by things like interest rates, reputation, and overall loan value.You can then use any of the contact information contained in the app to get a hold of the lender directly before you apply.
Stay Insured. Track Your Policies. Meet Insurry.
Understand that we aren't lenders ourselves, nor can we give you any money. We also cannot guarantee borrowing success. Instead, we can help you identify your best possible options and give you the information that you need to make an informed buying decision.
This data is critical because it can give you insight into your need to stay financially solvent and purchase a life insurance policy that makes sense for your needs. In addition, by working with us and identifying better lending possibilities, you give yourself the heads-up that you need to avoid unnecessary expenses and improve your life insurance situation at the same time. That's a win-win, in our opinion.
Deciding on a Policy
So, is life insurance worth it at any age? As you can see, life insurance is an excellent investment for just about anybody. Even if you aren't sure about your overall financial health and need to find a lender who can help you afford a policy, buying one while you're younger or older may provide you with too many advantages to ignore. Perhaps that's why more and more people are buying them.
But are life insurance policies a good choice once you hit your 60s or even yours 70s? Yes, because they still provide many benefits. While the policy costs may increase heavily, you can still get a term life insurance policy and avoid too much financial costs. A 10-year term life insurance is probably all that anybody will need when they hit 60 or 70 unless they're like the dearly departed Betty White and live to be nearly 100 years old.