Life insurance for 55-year-olds: Is it worth it? | finder.com
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Life insurance for 55-year-olds

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Leverage your financial position by locking down life insurance now, before rates creep up.

By your mid-50s, you’ve probably climbed up the career ladder to a comfortable position. You might have a family, a portfolio of financial assets or a business. That’s where a life insurance policy comes into play. It can help you give your loved ones a financially secure future and protect everything you’ve worked to build.

Life insurance underwriting is complex and based on factors such as your age, health and lifestyle. When you hit your 50s, the rates increase year over year, and they usually jump even higher at 60 and beyond. If you need life insurance, the best time to buy it may be now, while you can still lock in a good premium.

Life insurance companies for 55-year-olds

Name Product Issue Ages Minimum Coverage Maximum Coverage
18 - 80 years old
$50,000
$25,000,000
The easy way to compare and buy term life insurance. Get a quote in 2 minutes from more than a dozen companies.
18 - 85 years old
$50,000
$10,000,000
See the most affordable quotes from 16 life insurance companies side by side. Get help and advice from a team of licensed experts.
18 - 64 years old
$100,000
$2,000,000
Customized term life insurance policies up to $2 million, no medical exam required.

Compare up to 4 providers

Which is the cheapest life insurance provider for 55-year-olds?

Let’s look at a 20-year term life policy with $250,000 of coverage. According to our research, the most inexpensive providers for a 55-year-old nonsmoking man may be Banner Life and William Penn at around $63.43 a month. For smokers, those same providers tend to charge $242 a month.

The cheapest providers for a 55-year-old nonsmoking woman may be Protective Life, Banner Life or William Penn at around $49.45 a month. If you smoke, Banner Life and William Penn may offer a rate of $180.73 a month.

What is my risk of dying in the next five years?

You have passed a few milestones, and you have more ahead of you. Based on our life expectancy data, a typical 55-year-old man’s risk of dying in the next five years is 4.51%. For the average woman, it’s 2.73%.

It helps to look at these figures alongside average life expectancy in the US. A man who reaches his 65th birthday can expect to live until 84.3, while a woman is likely to live until 86.6. Of course, these are averages; around a quarter of 65-year-olds will live past 90.

Though life insurers put a huge emphasis on age, you can still qualify not only for coverage, but preferred rates. The rates increase steadily as you move through your 50s, so if you’re interested in taking up life insurance, you may want to apply soon for the best rate.

Odds of dying for a 55-year-old

Within the next…MaleFemale
Year0.78%0.48%
5 years4.51%2.73%
10 years10.59%6.46%
20 years29.35%20.01%
30 years61.43%48.43%

Life expectancy rates are merely calculations based on averages of mortality among specific population, gender and age groups. They do not predict the specific life expectancy of any one person - including you. If you're concerned about your overall health and risks, talk to your doctor or health professional.

What is the typical cost of life insurance for 55-year-olds?

It’s difficult to say, because the rate you’re offered is a result of a complex range of factors, including your age, health, family history, occupation and lifestyle. However, our research suggests a 55-year-old man in perfect health can get $500,000 of coverage in a 20-year term policy for around $127.95 a month. Over the course of the policy, this comes to $30,708.69, with an expected value of $146,746.21.

The typical cost of that same coverage for a 55-year-old woman is around $94.53 a month. Over 20 years, this totals $22,687.89, with an expected value of $100,040.69.

What is expected value and how is it determined?

The expected value (EV) of a life insurance policy is the anticipated value based on the odds that you’ll die and your death benefit will be paid out. You can find the expected value by multiplying the probability of you dying by the payout of the policy. If the expected value is higher than the total cost of the policy over the term length, then it may be considered a good investment. However, if the expected value is less than the total amount you’ll pay into the policy throughout the term, then you may want to look at other providers or alternatives to life insurance.

Let’s look at an example. Say you’re a 50-year-old nonsmoker who’s thinking about taking out a 20-year term life policy for $500,000 at $79.88 a month. As a man, you have a 20.97% chance of dying within the next 20 years, so you multiply that by $500,000 to get an expected value of $104,859.38. Since the total cost of your policy over 20 years adds up to $19,171.89 — less than the expected value — then your life insurance policy may be considered a good investment for the future.

What is the best life insurance policy for 55-year-olds?

To answer this question, think about your reasons for buying life insurance. Do you want to provide your family with the money to pay for your funeral and debts, or give them more of a financial safety net? Are you hoping to leave your kids an inheritance, or are you aiming to leave a lasting legacy that impacts your grandkids’ lives, too? Are you treating life insurance as part of your estate planning? If you’re a partner in a business, do you want your policy to bridge the gap until they find a replacement, or give the company cash flow beyond that?

Your responses will give you a better idea of the type and amount of coverage that suits your situation.

Most 55-year-olds opt for a 10- or 20-year term life policy. This usually takes them up until their retirement and gives them time to pay off any existing debts, such as a mortgage or car loan. If they die during that period, their policies kick in to offer their families a source of income and alleviate financial burden.

While term life is the cheapest and most basic form of protection, it’s a popular choice for those in their mid-50s. At that stage of your working life, you’re probably in your financial prime and contributing to a 401(k) or IRA. A term policy offers your family a sense of security in case something happens to you and leaves you with the funds to plan for your own future.

If you’re buying life insurance for estate-planning purposes, you might want to invest in a permanent policy. This type of coverage is more expensive, but it lasts a lifetime — so long as you make your payments on time. It also builds cash value over time, so your beneficiaries will receive a bigger payout when you die. It also allows you to take out loans against your own policy, which may come in handy if you need to put a down payment on a house, pay for your child’s wedding or cover medical costs for your parents. The majority of 55-year-olds go for survivorship or universal life policies.

Most term policies give you the option to convert to a permanent policy by age 70, so there is some flexibility if your needs change.

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How do I calculate my life insurance needs?

When you’re working out how much life insurance to buy, assess your financial obligations now and anticipate your financial needs in the future. Take these factors into account:

  • Outstanding debt. Even though your career is well-established, you may still have some debt to your name, such as a mortgage or car loan. Your debt doesn’t die with you, so you’ll want to leave enough money to cover it.
  • End-of-life expenses. Funerals aren’t cheap. To ensure your family isn’t saddled with that financial burden, your policy can cover your funeral and burial costs.
  • Spouse. Are you married? Should you die, a life insurance policy can provide your husband or wife with the income they need to live.
  • Spouse’s age and lifestyle. The younger and healthier your spouse is, the more coverage you may need. On the flipside, if your spouse has another source of income, like from working, you can probably opt for a smaller policy.
  • Age of children. Are you a parent? Consider your kids’ ages and the stage they’re at in their careers. If they’re earning money and moving into higher-paying positions, you may not need to purchase as much coverage. If they’re still very young, your life insurance policy can offer them a financial buffer.
  • Grandchildren. Fifty-five-year-olds in a good financial position often add extra coverage for their grandkids’ benefit.
  • Care. At this age, you may have ailing parents, and you might be covering their medical expenses or nursing home costs. If so, factor that in.
  • Estate planning. Do you have real estate or business holdings? Protect them with a life insurance policy. Should you die, your beneficiaries will receive a tax-free death benefit.
  • Business ownership. Are you an owner, partner or key executive in a business? A life insurance policy can give the company and its employees a financial cushion as well as cash flow if you die.
  • Inheritance. If you’ve received an inheritance, re-evaluate your coverage.
  • Financial assets and plans. By your mid-50s, you may have a few financial assets to your name, such as a home or vacation home, boat or trust. Factor those in, along with your other savings or investments, such as a 529 plan. Just be sure to keep your retirement planning separate from your life insurance.

Case study

As you’re shopping around for life insurance, you might see a noticeable price difference between coverage levels. This gets steeper as you age, which is why you should consider taking on a policy as soon as you feel you need it.

If you’re trying to figure out how much coverage to buy, this case study may help.

Let’s use a 55-year-old nonsmoking woman as an example. According to our research, a 20-year term life policy with $250,000 of coverage from Protective Life, one of the most budget-friendly providers, tends to cost around $49.45 a month. If she wants to boost her coverage to $500,000, that same provider might charge $89.44 a month — a price difference of $39.99 for double the coverage.

Lifting coverage to $1 million is a more expensive investment. According to our research, Protective Life may charge around $165.55 a month.

Bottom line

Many 55-year-olds have built up some wealth and paid off a good chunk of their debts. The majority of people go for a term life policy that takes them up until their retirement, usually 10, 15 or 20 years. This gives them enough time to get their financial affairs in order, while assuring their loved ones they’ll be taken care of if anything happens. Some policyholders in their mid-50s look at life insurance as an integral part of their estate planning and choose a permanent policy that builds cash value.

At this age, you have your pick of providers. To make an informed decision, compare life insurance policies before settling on one.

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