Sometimes people over 50 want to take out a new life insurance policy. Some of the reasons for this might be having a child later in life or to care for adult children or grandchildren or perhaps for estate planning. Whatever the reason, there are options.
The shorter one’s life expectancy is, the more life insurance will cost. For that reason, life insurance over the age of 50 is significantly more expensive than it is for people in their 20′s for the same amount of coverage. The reason is that the insurer collects fewer premiums, on average, and the premiums collected have a shorter time frame to grow prior to having to pay the death benefit.
Term life insurance is generally the best solution for a senior. Whole insurance usually involves an investment component that will grow over time. People with a shorter lifespan, however, cannot take advantage of this growth the way that a younger person can.
To give a brief outline of pricing and the expense of senior life insurance, a man, aged 70, in “normal” health who wants a $1,000,000 policy, may have to pay $60,000-%80.000 per year or more for that policy. The life expectancy of that person may only be 10 years, so in order for the insurance company to break even, they have to charge the expected value of the payments in relation to the $1,000,000 payout.
If, as a senior, you do not think you can make the payments until you pass away, it is best to not get life insurance in the first place. If you let the policy lapse, the insurance company keeps all the money paid, but never has to pay the death benefit. This is the worst possible scenario for a customer. You should be prepared to make the payment for years, well longer than your life expectancy.