Life Insurance over 50
Looking to retire in 4 years and will collect a city pension approx. $75,000 (hopefully) and should have about $500,000 in my 457 plan. I am wondering if a term life policy would be better than a whole life for my wife when/if I pass away. I am the sole financial provider, if I pass my wife would get half my pension and I want to be sure that portion would be covered.
Terry Says: Life insurance can be expensive at your age, and especially so if you are not in really good health. In fact, you may not be able to purchase life insurance. And then what term would you use. I’m guessing you are in your early 60s — so 20-year level term would be the best choice — but it will be VERY expensive. Try places like www.AccuQuote.com or www.TermQuote.com for a quote.
Does your employer offer any kind of group life insurance that you could continue on your own after your retirement? That might be the best possibility, and might require only a minimal health examination to qualify.
If you select term, then you’re faced with the ugly choice of predicting how long you’re going to live. Will 20 years do it? Your life expectancy, if in good health, is longer than that. And if you’re not in good health you wont’ get the insurance. Whole life is likely to be similarly expensive, but check with an agent.
When you think about it, there might be other products that you could consider to provide an income for your wife, after you are gone. Consider a Qualified Longevity Annuity. It’s in my column archives at Huffington Post — but here’s the link: http://www.huffingtonpost.com/terry-savage/longevity-annuities-buyin_b_5607731.html
This type of annuity product starts paying out at a later date — and the benefits can be spread over your wife’s lifetime, as well. OR, consider working longer and saving more money. And if your wife is eligible for Social Security, try to wait as long as possible — till age 70 — to make sure she gets the largest base check, upon which future inflation increases will be calculated.