Life Insurance After 45: Harder To Get Covered?

Life insurance is a tricky topic, and it's often hard to know when to start thinking about it. The short answer is that it depends on your personal circumstances. If you have financial dependents, such as a partner, children or ageing parents, then it's worth considering getting life insurance. This is true at any age, but especially so once you hit your 40s and 50s, when life insurance can help cover funeral costs, pay off debts, or provide an inheritance.

The older you get, the more expensive life insurance becomes, so it's a good idea to lock in your rate as soon as you identify a need for coverage. If you're in your 40s or 50s and considering a mid-life life insurance policy, you have plenty of options to choose from. The best type of life insurance for you will depend on your budget, health and goals.

Life insurance for those with children

Life insurance is a tricky topic, and it's even more difficult when you have children. Here are some things to consider when thinking about life insurance for those with kids.

The primary purpose of life insurance is to provide financial protection for your loved ones after your death. This is especially important if you have children who depend on your income. The money from a life insurance payout can be used to cover funeral costs, pay off any debts, or provide an inheritance for your children. It can also help with college tuition fees or contribute to a charitable cause.

When to Get Life Insurance

The best time to get life insurance is when you identify a need for coverage. The cost of life insurance increases with age, so it's a good idea to lock in your rate as soon as possible. Life spans are increasing, and people are living longer, so even if you're in your 40s or 50s, it's not too late to consider life insurance.

Types of Life Insurance

There are two main types of life insurance: term life insurance and permanent life insurance. Term life insurance covers a set period, such as 10, 20, or 30 years, while permanent life insurance typically lasts for the rest of your life. Whole life insurance, universal life insurance, and burial insurance are different types of permanent life insurance policies.

Factors Affecting Life Insurance Rates

The main factors that affect life insurance rates are age, health, and lifestyle. The older you are, the higher your premiums are likely to be. Health conditions and risky lifestyles can also increase your rates.

The amount of life insurance you need depends on your financial situation and goals. Consider your long-term financial obligations, such as mortgage payments, college tuition for your children, and any debts you may have. Subtract the value of your assets from these obligations to estimate the coverage you need.

Life Insurance for Children

You can also buy life insurance for your children. This can provide financial protection in the event of their death and guarantee their insurability later in life, especially if they have a family history of medical issues or choose a high-risk career. Child life insurance policies usually have lower coverage, typically less than $50,000, and the cash value grows tax-deferred.

Alternatives to Life Insurance for Children

Instead of a separate policy for your child, you can add a child term rider to your own life insurance policy. This covers multiple children and pays out a small amount if a child dies. You can also take advantage of supplemental life insurance offered through your employer, which may cover eligible dependents.

Choosing a Life Insurance Company

When choosing a life insurance company, consider their financial stability, customer satisfaction ratings, policy types and features, and cost. Compare quotes from multiple companies to find the best rate and ensure the company has a good reputation for paying claims.

In summary, life insurance is an important consideration for anyone with children, and it's worth weighing your options to ensure your loved ones are financially protected.

Life insurance for retirees

Life insurance is a commonly used tool to protect against potential income and other losses. There are multiple types of life insurance, and some common ones to use in retirement include:

Term life insurance

Term life insurance is temporary life insurance that offers coverage for a set period, typically 10 to 30 years. If you outlive the term or stop paying premiums, your coverage ends.

Whole life insurance

Whole life insurance is a type of permanent life insurance that does not expire as long as you keep paying the premiums. It can be useful for lifelong needs and is often used in estate planning. Whole life insurance can also include cash value, which is money you could access during your lifetime.

Universal life insurance

Universal life insurance is another type of permanent life insurance that enables you to adjust your premium payments annually. Most whole life policies charge the same premium throughout.

Burial insurance

Also known as final expense or funeral insurance, burial insurance is a small whole life insurance policy designed to cover funeral costs. These policies typically offer coverage between $5,000 and $35,000. Some burial life insurance policies do not require a medical exam.

If you're retired and no longer work to provide for your family, you probably don't need life insurance. However, there are situations where it makes sense to keep or purchase life insurance in retirement. These include:

• If you retire with debt or still have income that supports your family.
• If you want to leave an inheritance or pay estate taxes.
• If you have children with special needs or children who are still financially dependent on you.
• If your spouse relies on your pension income.
• If you're continuing to work part-time and earning an income.

The appropriateness of life insurance and the type of policy you choose depends on individual circumstances. People in their 40s and 50s may want to consider life insurance, especially if they have a family that depends on their income. Life insurance can provide financial protection for your loved ones if you pass away. However, the cost of premiums tends to increase with age, so it's advisable to purchase a policy earlier to lock in lower rates.

Life insurance for those with debt

Life insurance is a contract under which an insurance company agrees to pay a specified amount after the death of an insured party, as long as the premiums are paid. The payout amount is called a death benefit. Policies give insured people the assurance that their loved ones will have financial protection and peace of mind after their death.

There are two main types of life insurance: permanent and term. Permanent life insurance policies do not have an expiration date, meaning you’re covered for life as long as your premiums are paid. Many permanent life insurance policies offer an investment component that allows you to build cash value by investing a portion of the premiums you pay in the stock market or earning interest on your account. Term life insurance, on the other hand, only covers you for a set number of years and does not accumulate cash value.

The primary purpose of life insurance is to replace your income after you die. So, aside from covering debt, you may need coverage if anyone relies on you financially. The payout can replace your salary and give your loved ones the cash they need to maintain their lifestyle.

In general, the assets in your estate are used to pay off your debts when you die. If there's not enough money in the estate to settle the debt, it goes unpaid. However, there are circumstances where other people may be responsible for the remaining balance. For example, if someone co-signs your debt, they're typically responsible for it after you die. Similarly, a joint owner of the debt is equally accountable for it. So if you or the joint owner die, the surviving member must pay off the balance.

Life insurance can be used to pay off various types of debt, including mortgages, credit card bills, and personal loans. If you have whole or universal life insurance coverage, your policy comes with a cash value that you pay over time. You can then withdraw that cash and use it for a variety of reasons, including paying off debt.

If you're considering life insurance to cover your debts, it's important to weigh the pros and cons. On the one hand, you may be able to pay less total interest by paying off the debt sooner, reduce your debt-to-income ratio, and free up more money for saving and investing. On the other hand, deducting some of the cash value will reduce the death benefit later on, and you could end up paying surrender fees.

When deciding whether to get life insurance to cover your debts, it's essential to consider your financial and family situation. If you have significant debt that outweighs your assets, life insurance can provide financial protection for your loved ones. However, if you have enough money to cover your debts and final expenses, you may not need life insurance.

Life insurance for those with health issues

If you have a pre-existing health condition, it doesn't mean you can't get life insurance, but it may result in less choice and higher costs. Each insurer has its own underwriting process, which is how they assess an applicant's risk profile, and some insurers are more flexible about certain health conditions than others.

A pre-existing condition is a medical issue you were diagnosed with or treated for before applying for life insurance. Some of the more common examples include:

• High blood pressure
• Asthma
• Diabetes
• Heart disease
• HIV infection
• Anxiety and depression
• Attention Deficit Hyperactivity Disorder (ADHD)
• Post-traumatic Stress Disorder (PTSD)
• Substance abuse

Insurers typically group applicants into rate classes based on their health, such as standard, preferred, or super preferred. Most people qualify for preferred or standard rates, but if you have a serious health condition, you may only qualify for substandard rates. This means that, depending on the situation, a pre-existing health condition might cause an early or unexpected death, which increases the risk for the insurer. As a result, the cost of the policy is higher. If the risk is too high, the insurer may deny coverage altogether.

Life insurance options for people with pre-existing conditions

Don't assume you'll be turned down for life insurance just because of a chronic health condition. Insurers may quote a higher premium, but coverage is still accessible. Here are some options:

• Guaranteed issue life insurance: If your pre-existing condition stops you from securing a competitively priced term or permanent life insurance policy, you might want to consider a no-exam policy such as guaranteed issue life insurance. These policies guarantee acceptance as long as you are within a certain age range (usually 50 to 80), but you don't need to take an exam or answer questions about your health to qualify. However, this means you often pay much more for less coverage.
• Group life insurance through work: Many people, including those with health problems, can get basic group life insurance through their employers. Basic coverage is typically limited to one or two times your annual salary, but you won't have to take a health exam to qualify. Note that you will most likely lose the coverage if you leave the job.
• Accidental death and dismemberment insurance: If you don’t qualify for a term or permanent life insurance policy, you may want to consider accidental death and dismemberment insurance. The death benefit is paid out only in the event of an accidental death, which means your medical history is not used to determine eligibility. However, your death must be caused by a covered accident for your beneficiaries to receive the payout.

Tips for buying life insurance with a pre-existing condition

• Be mindful of when you apply. An insurer will likely turn you down if you apply shortly after a cancer diagnosis or a heart attack, but you can always reapply, especially if your medical records demonstrate that your treatment has been effective.
• Take advantage of improvements in your health. If you are accepted but are being charged a high rate, you can ask for a life insurance re-rating (and a lower premium) once your condition is under control and your prognosis is positive.
• Find the right agent. Look for an independent life insurance agent who works with an impaired risk specialist—a broker who will know which insurance companies are more likely to provide a good rate for your particular condition. Make sure your agent is submitting informal inquiries rather than formal applications that will be recorded by the MIB Group.
• Get quotes from a handful of insurers. Insurance companies can be unique in how they review specific health conditions. Compare life insurance quotes to make sure you're getting the best possible coverage at the best possible price.

Life insurance for those with a spouse

Life insurance is a complex topic, and it's important to consult a financial professional for personalised advice. Here is some general information about life insurance for those with a spouse.

Joint vs. Separate Life Insurance Policies

Married couples can choose between a joint life insurance policy or separate life insurance policies. A joint policy covers both spouses, while separate policies cover each individual.

Joint Life Insurance Policies

Joint life insurance policies are generally less flexible than separate policies. They may be useful for estate planning and minimising taxes, and they can provide financial security for the surviving spouse. However, the payout structure might not fit all needs, and the policy can become complicated to manage if the marriage ends. Joint policies can also be more expensive, offering less coverage for the same premium as separate policies.

Separate Life Insurance Policies

Separate life insurance policies allow each spouse to choose from a variety of options, including term life, whole life, and universal life insurance. This provides greater flexibility and can be tailored to individual needs and financial goals. However, separate policies require managing multiple policies, and if risk factors such as poor health are present, premiums may be expensive.

Types of Life Insurance Policies

There are two main types of life insurance policies: term life insurance and permanent life insurance.

Term Life Insurance

Term life insurance covers an individual for a set period, usually 10 to 40 years. It is one of the most affordable ways to provide financial protection for loved ones and is easy to manage. However, it does not build cash value and only provides coverage for a specified term.

Permanent Life Insurance

Permanent life insurance, including whole life and universal life insurance, offers lifetime coverage and often includes a cash value investment component. It is significantly more expensive than term life insurance but can be useful for certain situations, such as if you've maximised contributions to other investment accounts or have lifelong dependents.

Factors to Consider

When deciding on life insurance, it's important to consider your financial situation, coverage needs, and personal preferences. Here are some factors to keep in mind:

• Age: The cost of life insurance generally increases with age, so purchasing coverage early can help secure lower premiums.
• Health: Health characteristics can strongly impact policy rates.
• Income: If one spouse is the primary earner, life insurance can help protect the family financially if the primary earner passes away.
• Debts and Expenses: Life insurance can help ensure that the surviving spouse isn't overwhelmed by debt and living expense payments.
• Children: If you have children, especially those with special needs or those who will be financially dependent for life, life insurance can provide a safety net for their future.
• Estate Planning: Life insurance can play a role in estate planning, helping to create liquidity and minimise taxes.

In summary, the best life insurance option for those with a spouse will depend on their unique circumstances. Consulting with a licensed insurance agent or financial professional can help navigate the complexities and choose the most suitable coverage.

Frequently asked questions