California Life Insurance Over 50 Buyers Guide
Choosing the Right Amount of Coverage
The amount of life insurance protection you should buy depends on how much income your survivors will need, how much you own and owe, and the amount of other life insurance available to you. If you're married, both you and your spouse should consider buying life insurance.
A good rule of thumb is 10 years replacement income plus any outstanding debts, plus $150,000 per child under the age of 25 or still in school. In addition, it is a good idea to carry a smaller separate burial policy, as term and burial do not mix for the obvious reason that you do not know when death will occur and do not know if your health might change in such a way that you cannot buy insurance later.
Term Periods
Term life insurance is usually offered for periods ranging from 1 to 30 years. Consider choosing a term that matches your need for life insurance protection. For instance, if your main reason for buying life insurance is to protect your 7-year-old twins until they're out of college, you'll want to buy a policy with a term of at least 15 years. Different types of term life insurance will have different premiums. Level term, in which the death benefit stays the same over the course of the policy, and renewable and convertible term life policies will tend to have higher premiums, but may offer the protections you want.
Burial Insurance
Insurance for burial, unlike term life insurance, is needed for an unknown length of time. Because of the nature of this type of insurance, whole life or universal life insurance tend to be the best option for coverage.
Common cost necessary for burial does vary based on where you live, but can range from $5000 for cremation and no service, up to in excess of $50,000 for more expensive locations.
Estate Transfer
If you are over 50 and have a small, medium, or even large sized estate, you have to prepare at some point to transfer the estate to another party. Tax rules for life insurance are established in order to easily facilitate transfer of funds without passing through the probate system, avoiding most taxes, and typically paying out much greater amounts than were deposited into the account.
In cases where as little as 10,000 is in a bank account or CD that is not planned to be needed for retirement expenses, an immediate estate growth of up to 50% can be achieved by depositing the funds into a single premium life insurance policy instead, and in most cases should those funds be needed later for a medical emergency, they can be accessed without penalty.