Term Or Perm Life Insurance For Boomers?

Is Term or Perm Life Insurance Better?

As we people over 50 approach our retirement years, it may be time to evaluate our life insurance policies. Of course, a lot of boomers do not even have any type of policy. Many had one, but it was a term policy that expired, it lapsed at some point, or it was provided by an employer where we no longer work.  Some older people do have policies that they purchased in the past, but want to know if that coverage still serves their needs.

Note: You can get standard whole life insurance quotes here.

Is It Time To Trade In Huge Term Policies?

For example, let us say that Mr. Jones purchased 30 year term life for $300,000 20 years ago, when he was 35. At the time, he wanted to make sure that his family could pay off his mortgage if he passed away. He was also concerned about replacing his income and making sure his kids could get an education. But now, Mr. Jone only has a few thousand dollars left on his mortgage, his kids are already on their own, and he has some savings to help his wife supplement her own retirement savings.  Mr. Jones might wonder if he still needs such a large term policy. Maybe the money he spends on premiums could be better used to save for retirement or puchase a smaller policy.

One solution may be to reduce the term policy to a smaller face value. Even thoughe Mr. Jones has aged 2 decades, a lower face value may be a lot cheaper. Or maybe it is time to consider buying a smaller policy, but purchasing whole life insurance instead! He could have coverage that would not expire, that could be used to transfer wealth when he dies, and that could even get paid up before he retires.

Replacing policies is a big decision, and is usually looked at with extra care by agents and insurers. However, it is not always the wrong decision. The right coverage for a 35 year old may not be the best policy for a 55 year old.

If Mr. Jones purchased a policy that gave him the right to convert to whole life without having to prove he was healthy, he won’t even have to go through a long application process to make the switch.

Advantages of Permanent Life Insurance

Look at some of the reason that people buy standard whole life instead of term life.

• Whole life does not expire. It covers the isured person as long as the policy is kept in force. By keeping a policy in force, we mean that it has been paid for.
• Whole Life Can Build a Cash Value. It could be borrowed against or cashed in. Sometimes it can even be used in a senior life settlement to help the owner while they are still alive. It can also be a very tax friendly way to transfer wealth or smooth over business deals.
• Whole Life Insurance May Be The Only Solution For Older People. There are whole life policies that have been specifically designed for the senior market. While we have seen some term life for older people, it is more common for seniors to purchase whole life insurance.

Disadvantages of Whole Life Insurance

Whole life is not the right solution for everybody. Premiums will be higher than they would be for term. Many experts tell us that we are much better off taking the extra money and finding other investments. That advice used to be practially the canon of financial advisors. However, this may not have taken into account recent market account downturns and the tax advantaged status of life insurance proceeds.

The right decision, term vs. whole life,  really depends upon you, and your own unique situation. Online insurance quotes can help you compare policies, find a local insurance agent, and make the best choice for your family or business.

Related articles:

1. Term Life Insurance After Age 50
2. Term Life Rates For Older People
3. Term Life Savings for Older People
4. Life Insurance For Over 50s
5. Looking For Life Insurance At Your Age?

Tags: permanent life, term life, whole lfie universal life

This entry was posted on May 21, 2010 at 5:37 pm and is filed under Finance & Insurance. You can follow any responses to this entry through the RSS 2.0 feed.