Many of us purchase life insurance in our 20s or 30s after such life-changing events as marriage or the birth of a first child.
But what if you don't? And what if you arrive at your 50th or even 60th birthday without life insurance? Or with a term or permanent policy that no longer fits your needs?
Is there affordable life insurance after 50? Or 60?
The short answer: Absolutely, provided you're in good health.
And it's something you ought to look into because the same life milestones that occur in our 20s and 30s sometimes make an encore in our 50s and 60s, according to Loretta Nolan, a fee-only financial adviser in Old Greenwich, Conn.
"Many people are remarrying and having kids later in life, so some of those decisions that they previously may have had in their 50s are being delayed until their 60s," Nolan says.
Your life insurance needs will change as you advance through the decades, says Scott Witt, an actuary and fee-only insurance adviser in New Berlin, Wis.
"Between 50 and 60, a lot of people have moved through their highest income-producing years and are now in more of a retirement preservation mode," Witt says. "A 50-year-old has enough years of income left that they're probably thinking about income replacement. At 60, you may look to enhance your retirement nest egg with supplemental retirement income from your life insurance."
Unfortunately, premium costs and health underwriting become more onerous as we age, further complicating insurance planning on life's back nine.
"Insurers have to charge more to a 55-year-old for a 10-year term policy than they would a 45-year-old because there is a significantly greater chance the 55-year-old will die in the next 10 years than the 45-year-old," says Witt.
Provided you need life insurance, here are some major issues and ways to save money, whether you're in your 50s or your 60s.
Life after 50: To term or not to term?
For 50-somethings, a 15- or 20-year level term policy may be the most affordable way to protect your income and your loved ones as you approach retirement, says Glenn Daily, a New York-based fee-only insurance consultant.
But before you buy, consider two aspects of term life that you probably ignored in your 20s or 30s: convertibility and guaranteed insurability.
"It's all about whether you can convert to a permanent policy," which would continue to cover you into your senior years, says Daily. "And because of your age, you won't be offered a guaranteed insurability option," meaning you might have to stay healthy if you want to stay insured.
Witt says by making the right move in your 50s, you can avoid losing coverage you may want to keep or being denied or priced out of a new policy due to a health condition.
"If you are really concerned about conversion, you should probably buy a more expensive term policy because the companies that have the cheapest term policies are not particularly attractive for permanent policies," he says.
And be sure to note your conversion deadline, as many conversion periods end years before the term policy itself expires.
What's the best way to be proactive so you can maintain affordable life insurance and keep your options open even if your health later declines?
Daily suggests combining a modest universal life, or UL, permanent policy with a term insurance rider so you'll still have the UL coverage when the term policy expires. That way, you cover your income over the length of the term, and the permanent policy's "cash value" component allows you to accumulate money for retirement. Plus, you avoid paying the heftier commission that would come with full-fledged term coverage.
Another option is to leave term out of the mix and buy more insurance than you currently need through a UL policy with flexible premiums. That would enable you to scale back the benefit amount as needed to keep the premium affordable.
"You want to keep as many options open as you can," Daily says. "I like term insurance, but the older you get, the more likely it is that term is not going to satisfy your need and you will have to look at a cash-value policy in some form" to provide a financial cushion for you and protection for your dependents beyond the length of a term.
Life after 60: Fine-tuning for retirement
By 60, most of us will have a clearer picture of our assets heading into retirement. Nolan says that's the time to take inventory on life insurance needs as well, starting with your employer's group life policy.
"We need to find out if it can be continued into retirement, and if so, at what cost?" says Nolan. "Oftentimes it's at a much higher premium scale. I would keep it if someone were in ill health when they retire, but otherwise probably not."
"If your health has improved -- say you've quit smoking or lost weight since you purchased the policy -- you can go back to the company and they can change the premium for you," says Nolan. "Or perhaps get new insurance."
Before you jettison an existing permanent policy, Nolan suggests this novel twist: Let your adult kids take over the payments. After all, they're the ones who would ultimately benefit.
"If you're widowed or divorced and don't need the policy but it's relatively affordable, the children could sort of own the policy and pay the premiums," she says.
Witt, the insurance adviser in Wisconsin, says shopping for the right affordable life insurance policy or tweaking an existing one becomes more complicated with the passage of time and circumstances.
"This is not really a do-it-yourself type of thing," he says. "These are things that you would need a professional to do correctly."
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