The kind of life insurance that works best for someone depends on their age, among other factors. A 30 year old is at a very different place in life than a 65 year old. Some people are looking to use life insurance for the savings component as well as the death benefit. Others need it to cover a burial, and maybe can’t afford the sky high premiums for a big permanent life insurance plan. The point is, age plays a big factor to the kind of life insurance you should buy for yourself. Thus, it is important to understand what your needs are and what you should be aiming for.
For ages 0-18
Breakdown:
Term – Good if you just want pure life insurance protection for children during their early and formative years. Temporary protection. Cheaper.
Permanent – Good for permanent life insurance protection as well as a cash account that grows over time at around 3 – 5% yearly yield. More expensive option.
Summary
Most people don’t understand the benefit of getting life insurance on a child. It’s supposed to be for a bread winner right? Obviously, no one wants to outlive their children, and it shouldn’t happen that way. However, children sometimes pass before their parents and it’s better to have life insurance protection on them than to dig into your savings account. Most kids will live long and healthy lives, but it’s always good to prepare just in case they don’t. In particular, permanent life insurance is great to lock them in for something while they are healthy, because you never know what sort of condition they can develop later on that would disqualify them from coverage.
For ages 18-29
Breakdown:
Buy Term – If you have kids, though chances are you don’t. Still a good idea to get some if you plan on having kids or don’t want family to pay for an untimely demise.
(Recommended) Permanent – Permanent insurance is expensive…For older people. For this age group? Not so much. They are young and healthy, and not likely to die any time soon. They’ve got their whole lives ahead of them. Get as much as you can or start small. Two words; Compound interest. The cash account will grow over time, especially if you max fund it. By the time you retire, it has the chance to be worth hundreds of thousands or more, both in cash value and the death benefit.
Isn’t this age group too young for life insurance?
The answer to the best time to buy life insurance is always the same for everyone; Now!!! However, these are the best ages to buy life insurance because this is when it’s the cheapest. Unfortunately, most people don’t see the need or benefit because they don’t have families, and view life insurance as a product that only pays for a burial. Little do they know, life insurance has a ton of living benefits, and is arguably better than traditional retirement plans.
These are the ages of young adults. People that are still looking for their footing in the world. Some have kids, many don’t. Probably the best age to invest in permanent life insurance because of the compounding interest potential. Term is not the best, because you don’t have a family, and there’s not much benefit if you die, except to cover your own funeral of course.
Get term, whole life, and/or Indexed Universal Life.
For ages 30-50
Breakdown:
Both term and permanent recommended if you have a family.
Term – Definitely get some if you have a family, because permanent is likely to expensive to cover all of your needs at the death benefit you’ll want.
Permanent – Still young and healthy enough so that permanent life insurance is feasible and can grow nicely until retirement age, all the while providing a ton of benefits, and ultimately paying for your funeral.
Summary
This is the grown and mature age group. Many people have families and careers. This group has a huge amount of responsibility, with mortgages, bills, car payments, debt, etc. If they were to die, the people they’d leave behind would be in a very tough position financially, to understate it. Fortunately, this age group has a lot of options. Permanent life insurance is great, but if you decide you don’t want it, for all of it’s great features and benefits, term can cover a lot of the debts and bills they’d leave behind. Of course, you’d have to buy a separate plan either now (best) or later to cover your eventual funeral. I think this group would be best served buying a mixture of Permanent and temporary life insurance.
Get term, whole life, and/or Indexed Universal Life
For ages 50-65
Breakdown:
Term life – If it still makes sense for your situation, get term. Do you still have temporary life insurance needs? Term might make sense. Term doesn’t have cash value and isn’t recommended to cover a burial in the future for risk of outliving it. Term can cover temporary needs, but what temporary needs are left by this point? Do you have dependent children? Do you have a mortgage? You have to ask yourself what you’d need it for.
Permanent – Makes more sense for most in this age group. We can’t cover a permanent need with a temporary solution. We’ll all die someday, and we don’t want to take the risk of buying insurance that won’t be in force when that happens. Plus, there’s still some time before retirement to take advantage of cash value growth if you qualify for fully underwritten life insurance.
Final Expense (simplified issue) has cash value growth as well, but not anywhere near as fast as fully underwritten, because the cost of insurance built into the policy eats it up.
Guaranteed Universal Life is a form of permanent life insurance and fits certain situations perfectly. It’s the cheapest form of permanent life insurance, but doesn’t have any cash value. It’s for the people that waited late in life to get life insurance, and want more coverage than a final expense policy can affordably provide.
Annuity – Probably the perfect time to consider the purchase of an annuity. Guaranteed income for life that can start now or later. if one opts for a deferred annuity, the lump sum payment can double if it sits in the annuity for 10 years.
Summary
This age group has the people that are just getting started with happiness. They’ve seen it all and their kids have grown up, and maybe even brought them some grandchildren. However, there may still be some responsibility left. They are bombarded by life insurance companies to buy small policies specifically to cover their funeral, but that’s not the only option available to them.
They probably have a medical condition or two, which could make it harder to get insurance coverage. Term is available, and they might’ve just ended a 20 year term policy, but it’s time to decide if it’s still worth it. Do you still have dependents? Do you still have a mortgage that needs paying off? Do you have any other expenses that you hope to pay off in the next 20 years, but don’t have the money to do it right now and want it protected? Get term, if you can qualify.
It’s hard, but not impossible, for many people at this age to qualify for fully underwritten life insurance because they tend to have health issues. Permanent life insurance for any amount over 50,000 is going to be expensive for the average income person. Permanent life insurance is best purchased at earlier ages because of this. If you’re healthy enough, it fits your budget, and you want the benefits of permanent life insurance for more than just a burial, you can always apply for fully underwritten life insurance and see if you qualify.
If you can’t qualify for fully underwritten, you’re going to have to settle for a simplified issue (Final Expense) life insurance plan, and those are usually to cover small funerals. Generally, you won’t get more than 25k-45k in death benefit for simplified issue plans.
Annuities are best for this age group because most people retire around age 65 and want some guaranteed income for life. There are too many horror stories of people running out of money during retirement for this age group to not consider an annuity.
For ages 65-80
Breakdown:
Term – Very few companies will cover you at this age, although a few will, but maybe not at the same length terms. Overall, your options are limited. Many people in this age group have their mortgages paid off, dependents taken care of, and generally there isn’t much a need for temporary coverage in high amounts, but there are needs that arise with a small group of people. So it’s good to figure out if you really need it, but you probably don’t.
Permanent – The most suitable coverage at this age. You might have a decent nest egg and feel you can pay for you funeral with that, but that’s not optimal for a few reasons.
Guaranteed Universal Life is a form of permanent life insurance and fits certain situations perfectly. It’s the cheapest form of permanent life insurance, but doesn’t have any cash value. It’s for the people that waited late in life to get life insurance, and want more coverage than a final expense policy can affordably provide.
The case for Single Premium Whole Life
Number one, if you have 10 grand, you can immediately turn that into 20 grand worth of death benefit with a single premium life insurance policy, with no more premiums due.
Number 2, the payout is generally immediate, vs having your money tied up in probate court. Another way to avoid having your funds tied up is to set up a trust fund. A will is not enough to avoid delays in getting money to your beneficiaries, unless of course you share an account with a spouse, but that could always change.
Number 3, those savings could evaporate for any number of reasons, and it’s always secure to just get your burial taken care of.
Annuities – It’s still a great time get an annuity, and though you still have plenty of options, it might’ve been better to get it several years before retirement because of the guaranteed income base increase that doubles your investment in 10 years or so. Who knows, you might’ve done that with your money in other investments, so no harm, no foul in that case.
Summary
Most of the information for the ages 50-65 applies to this age group as well, with a few differences. Term life insurance isn’t going to be easy to get at these ages. Most carriers simply won’t offer it to you. So right off the bat, your main choice is permanent life insurance. And with permanent, you have three choices, single premium, fully underwritten (Whole), and simplified issue (Final Expense). Many people in this age group have health conditions that disqualify them from getting fully underwritten whole life or single premium whole life. If you can qualify, it will save you a little bit of money, but most don’t. So the good ol’ simplified issue a.k.a. Final Expense as you probably know it by now, is the main option. This age group can also qualify for pre-need burial plans fairly easily.
Get Term, Whole, IUL, and/or simplified issue whole life.
For ages 81 – 84
Breakdown:
Term – Not available. You won’t find term life insurance plans at this age.
Permanent – There are some permanent life insurance plans still available, but the options are not as plentiful. If you wanted options, it was better to get coverage before this age. However, we can still get you coverage, although it is unlikely you’d qualify for fully underwritten. Chances are you’ll end up with a simplified issue policy, which will cover your burial.
Annuities – There’s never a bad time to get annuities because it’s not based on health or age. If you have the cash, you’re in.
Summary
At these ages, you still have a few good simplified issue plans available, although not as many as before. There are even some fully underwritten plans available. It is just about impossible to get a guaranteed issue plan though, if you need one because of your health.
If you have health conditions that disqualify you from all the simplified issue plans and can’t get guaranteed issue, what you can do is get a pre-need plan. There are a few health questions, and the way you answer determines how much of your death benefit will pay out during the first 2 years. Upon surviving the first 2 years however, the full death benefit will pay out. This is the same way with graded, modified, and guaranteed issue life insurance plans.
For ages 85+
Term – Not available at these ages.
Permanent –
Very rare to find permanent coverage of any type (Fully underwritten or Simplified Issue) at this age.
Annuities – Still available at these ages, but is your nest egg as big, or has It been depleted? It was probably biggest at your original retirement age. The reason I ask is because the size of the lump sum you put into an annuity determines the monthly income you receive.
Summary
It is very rare for an insurance carrier to offer life insurance past this age. Pre-need is the way to go if you want your burial covered. Even if you have health conditions that would ordinarily disqualify you with traditional insurance carriers, you can still get covered, but the first couple of years may offer a limited death benefit. Waiting this long is similar to hearing a tornado warning and calling up insurance carriers to get property damage insurance.
This is the age group where most are lucky to say they’ve seen. Chances are, you don’t have dependents, and not many options available if you waited this long, but you can always get a pre-need burial plan and an annuity.
Conclusion
The kind of life insurance that is available to a prospective insured is heavily dependent on a number of factors, including health, financial status, and age especially, among other factors. What works for a 25 year old, might not work for a 65 year old, and vice versa. So it is important to know exactly where you stand in life and to be realistic about what is available to you. However, no matter how old you are, life insurance protection is available for everyone to take care of the most important expense, which is to leave a legacy to your loved ones.
Blue Crush Insurance
