| Term Life Rates for Those in Their 40’s and 50’s
Lowest in a Decade
Couples who believe they no longer need life insurance
after their youngest child reaches his or her 18th birthday could leave
their family vulnerable to serious financial problems, especially if
the sole income-earning parent dies.
“Term life insurance
is a product traditionally purchased to protect the financial future of
a surviving spouse and children under the age of 18, and term policies
are often allowed to lapse as a couple’s youngest child reaches that
milestone,” said Dr. Steven Weisbart, an economist at the Insurance
Information Institute (I.I.I.).
| "Too many people in their 40's and 50's assume they're too old to purchase this product at a reasonable price. |
Yet
even couples with grown children, who have set aside college tuition
monies and are close to paying off a mortgage, ought to discuss with
their insurance agent or broker the benefits of purchasing a new term
life insurance policy when their existing one elapses. The most
immediate consideration is that a surviving spouse must be at least 60
years of age before receiving Social Security survivor benefits and,
even then, the benefits are allocated on a reduced basis. Full Social
Security survivor benefits become available when the surviving spouse
reaches age 65 or older, depending upon their late spouse’s birth year.
Still, these benefits are inadequate to pay for anything beyond basic
household expenses. Term life insurance can help bridge the financial
gap for the surviving spouse.
“Too many people in their 40’s and 50’s assume they’re too old to
purchase this product at a reasonable price. But term life insurance
for that age range is more affordable today than it was a decade ago,”
Dr. Weisbart noted.
An I.I.I. study released earlier this year found that the annual
premium payments are typically around $600 for a 40-year-old male
non-smoker who is deemed a “standard” risk and wants to purchase a
20-year term life insurance policy with $500,000 in coverage. A
40-year-old male non-smoker who qualifies for “preferred” rates can
acquire the same policy for less than $400 a year. Premium rates for
women and younger people are even lower.
| Even
couples with grown children, who have set aside college tuition monies
and are close to paying off a mortgage, ought to discuss with their
insurance agent or broker the benefits of purchasing a new term life
insurance policy when their existing one elapses. |
In
determining how much life insurance to buy, the I.I.I. recommends
assessing the need to replace “hidden” income that is lost when an
income-earning spouse dies. Hidden income is money an employer
contributes to an employee’s 401(k) or similar savings plan, or to pay
the premiums for a family’s health insurance coverage. These savings
plan contributions and subsidized insurance premium payments cost the
employer thousands of dollars a year, a financial commitment that, in
most instances, reverts to the surviving spouse.
Other important factors to consider as a 40- or 50-year-old considering
the purchase of term life insurance include the financial condition and
physical health of a senior-citizen parent, the financial commitments
that may have been made by a two income-earner household, such as a
second residential property, and the day-to-day needs of grown children
still living at home.
For those looking to move away from term life policies, permanent life
insurance—such as whole, universal and variable life—or annuities can
be an attractive alternative.
For more information about life insurance, go to the I.I.I. Web site: http://www.iii.org/life .
The I.I.I. is a nonprofit, communications organization supported by the insurance industry.
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