Life Insurance for Over 50s

Obtaining life insurance for over 50s can sometimes be difficult. In this LoveToKnow interview with James C. Smith – a Financial Adviser with over 25 years of experience and active member of The Society of Financial Services Professionals – you'll learn the basics you need to know before purchasing life insurance at this age.

Life insurance rates increase with age.

Life insurance pricing is based on age; the younger you are, the less it costs. You will have more options at a younger age. In general, younger means healthier and pricing is based on both ages and health.

Generally, life insurance for over 50s may present a greater challenge simply because of health-related issues, medications, etc. However, many people can still get a preferred rating into their 50s, 60s and even 70s.

One limitation they will have is the duration of term insurance that they can buy. Term insurance is the lowest cost insurance because it runs for a specific set term, i.e. 10, 15, 20 or 30 years or longer. At age 50 most companies will limit you to a 20 year term policy. By age 60 many companies will limit you to a ten year term policy.

The questions that one must always ask them, at any age, are:

• How much life insurance do I need, and how long do I want to keep it in place?
• What is the purpose of the insurance? Is it to leave a death benefit, or to transfer wealth or cover final expenses?
• Do you need life insurance to cover a mortgage or definite fixed obligation which might best be addressed with term insurance?
• How much life insurance can I afford to pay each and every year?

Many 50 year olds may need life insurance for wealth transfer or estate planning. In this case it makes sense to look at permanent insurance with low cash values like a Guaranteed Universal Life (GUL) policy, owned by an irrevocable life insurance trust. A GUL policy is also good for a situation where a spouse chooses the “Life No Refund” option at retirement as their pension option. The purpose of the insurance is to replace the pension asset which would disappear at the death of the spouse and the idea is to keep the insurance forever at the lowest possible cost.

Whole life might come into play when a saving component is desired by the policy owner. There are times when a combination of term, whole life or GUL policies may make sense for a person.

Questions for life insurance are based more on the amount of insurance applied for than the age of the applicant. Personal health history questions can include questions that can go back ten or more years, including immediate family history questions. Criminal history and an applicant’s driving record are also very important to insurability as well credit check. You can expect to be asked to submit to a blood and urine testing for insurance amounts of $50,000 or more.

Company rating and company size should be considered. When considering a policy, always review the company’s rating (AM Best, Moody’s S&P) and size as well as just how competitive their pricing is on any given policy. In addition, it is always a good idea to have your agent/broker review any existing term policies you may have to see if they are convertible to permanent insurance before replacing them with a new policy.

Shop around as insurance rates have dropped as much 40 percent over the last five years. Maintain a healthy lifestyle and, if necessary, drop a few pounds to avoid a table rating. Smokers pay significantly more than non-smokers and most insurance define non-smokers as having not smoked for at least 12 months.

Companies with strong financial ratings are a good place to start. You should also always ask your broker or agent for proposals from at least three to five highly-rated companies to get competitive pricing. One independent broker should be able to do all the shopping. Insurance company rates are fixed within each state and no one agent can give a competitive advantage over another.

James C. Smith is an Investment Adviser Representative and Vice President of the Georgetown Financial Group, Inc. He is also a registered representative of Tower Square Securities, Inc. (member FINRA/SIPC), through which provides fee-based financial planning.

Jim’s clients range from individuals to corporations, and he conducts business in New York, New Jersey, Connecticut, Florida, and Pennsylvania. Jim has comprehensive knowledge of strategies for Financial Goal Setting, Retirement Income Planning, Wealth Preservation and Estate Planning. He helps clients of all ages recognize and achieve their financial goals.

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