For most people, life insurance is an essential investment. It’s especially important as you get older to ensure that your family is financially protected if you pass away. While it can be unpleasant to think about, planning ahead will give you and your family the peace of mind you need as you get older.

Many people avoid purchasing life insurance because they worry that it is going to be expensive. However, life insurance for a 55-year-old can actually be very affordable. In this article, we’ll discuss the average rates of life insurance for a 55-year-old, as well as what you should consider before you make a purchase.

What Type of Life Insurance Should I Get?

How Much Is Life Insurance for a 55-Year-Old? There are a few different types of life insurance to choose from, and the right kind for you will depend on your personal needs. Each type of life insurance has a very different price because the coverage is so different. Ultimately, each pays a death benefit if you die, but the length of coverage, whether it qualifies for dividend payments, and whether there is cash value are all factors that differ between the different types of insurance.

Term Life

For most people, term life insurance is the best choice. Term life insurance lasts for a specific period of time and then expires. Term life insurance is the most affordable, and you can typically adjust the death benefit to your needs.

Permanent Life Insurance

If you want life insurance coverage that will last your entire lifetime, you may want to consider a permanent life insurance policy. These policies cost more than term life insurance, but they don’t expire. Whole life and universal life are the two most common types of permanent life insurance. Permanent life insurance also has cash value, which allows you to use the policy as a way to grow your wealth during your lifetime. Whole life insurance premiums are typically about 5 to 10 times as large as the equivalent term policy in annual premiums.

Pros and Cons

Clearly, the downside of permanent coverage is that is is more expensive in the early years than term life insurance. The upside is that whole life insurance pays dividends, and these dividends grow in size over time. Dividend payments will eventually pay your entire premium. Universal life insurance pays interest, and if the policy is funded with very large payments in the early years the cash-value account will grow faster than the cost of insurance rises. To be clear, we do not usually recommend universal life insurance policies for most people, but whole life insurance is a niche product that is the perfect fit for some clients.

For many people who are 55, a term policy will suffice. Many people of this age are looking for coverage that will last them until they retire, which is typically at about age 70. A 20-year term policy is affordable, most people in reasonably good health qualify, and it is easy to shop for the cheapest coverage.

Final Expense Life Insurance

Another type of life insurance you may encounter while shopping is final expense life insurance. These life insurance policies are best for people who have health issues that would exclude them from more traditional forms of life insurance. A final expense policy is intended only to cover your funeral and burial costs and not much more. Because they are smaller, they are typically very affordable and don’t require a health exam. Usually, they are a whole life insurance policy with a simplified underwriting process. If you qualify for a traditional policy, it typically makes financial sense to purchase a smaller traditional policy over a policy specifically marketed as final expense life insurance because final expense premium rates are higher per dollar of coverage.

What Are the Average Insurance Rates for a 55-Year-Old?

For term life insurance, we will be looking at rates for a 55-year-old who has a $250,000 policy with a 20-year term. A man categorized in the preferred health class would pay $87/month, while a man in average health would pay $138. Statistically, women live longer, so their rates are lower. A woman in the preferred class would pay $62, while a woman in average health would pay $96. Those with diabetes pay slightly more – $151 for women and $185 for men. Smokers can expect to pay significantly more – $216 for women and $358 for men.

If you opt for a whole life insurance policy, your rates will be significantly more expensive. Again, we’ll be looking at a policy with a $250,000 death benefit for these averages. For those in the preferred health class, rates average at $611 for women and $685 for men. Women in the average health pay $630, while men in average health pay $696. Female smokers can expect to pay an average of $1592, while male smokers can expect to pay $2516.

$250,000 Coverage-55 Year Old MalePremier Health RatingStandard RatingSmoker RatingGuaranteed Issue
20 Year Term Life$87/mo$132/mo$155/mo$287
10 Year Term Life$72/mo$110/mo$141/mo$241/mo
Whole Life$685/mo$875/mo$1,032/moDoesn't exist in this policy size

What Affects the Price of Life Insurance

There are a number of factors that can affect the cost of your life insurance. Things like your gender, your death benefit amount, chronic health conditions, and whether or not you smoke can all have an effect on your insurance rates. Age also has a large effect, but if you are about 55 years old this is a constant. The life insurance company you choose also affects the price. This makes it very important to shop for different life insurance policies to find the one that is the least expensive for you.

Keep in mind that your insurance rates may be different, depending on your personal situation. For example, if you choose a lower death benefit or a shorter term, your rates will be significantly lower than the averages listed here. Your rates may also vary depending on which insurer you use.

Why Do 55-Year-Olds Need Life Insurance?

There are a number of reasons why you might need life insurance as a 55-year-old. The first is to cover the cost of your funeral. Funerals can get very expensive, and you might not have enough money in your savings to cover the costs. You’ll also need insurance to cover any debts you may have left behind so that your beneficiaries or estate are not left with them. For example, your family can use your life insurance to cover your student loan debts, mortgage debt, credit card debt, or any other financial liabilities you may still have.

If you have dependents, life insurance is also a must-have. Many people take out life insurance to ensure that their children or spouse still have money to live off of in the event that they pass away. Receiving money from the life insurance company gives your family time to get back on their feet during a very stressful time.

For 55-year-olds that need whole life insurance, the reasons can sometimes be different. They may want coverage to help pay estate taxes or to help avoid taxes. They may also want to leave a legacy, split up an illiquid estate evenly, or even make a large donation to a charity upon their death.

Tips For Buying Life Insurance

When purchasing life insurance, you should always get quotes from multiple insurers. Each insurer determines their rates differently, so one insurer may be significantly cheaper than another. Getting quotes from several different insurers can help you find the best value for money. If you are shopping for whole life insurance, make sure that you understand the illustration and the effect that dividends can have. Dividends can also be used for different things and it is important to understand each dividend option.

It can also help to talk to an independent insurance agent if you’re struggling to find an affordable policy. Insurance agents have connections with many different companies, and they may be able to connect you with a reliable insurer that you wouldn’t have found on your own. They may also be able to help you find discounts that insurers don’t advertise.

If you opt to shop for life insurance on your own, you’ll also want to make sure to ask each company about the discounts they offer. There aren’t as many discounts available for life insurance as there are for other types of insurance, such as auto or home insurance. However, you may still be able to save some money for simple things like owning a home, being married, or serving in the military.

Finally, make sure to stay on top of your health. Life insurance companies charge higher rates for people who have chronic health conditions, as well as people who smoke or engage in other unhealthy habits. Maintaining healthy routines can help you avoid high rates later on.

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