Is Life Insurance at 50 in Canada Still Worth It ? A Closer Look for Canadians

With these life changes comes a crucial financial question – should you still get life insurance at 50?

Turning 50 marks a significant milestone in life. It’s a time when your kids are getting older, retirement is on the horizon, and you may be starting to think about your legacy.

For many Canadians, the answer is yes. While life insurance gets more expensive as you age, there are still compelling reasons to have coverage in your 50s. The key is understanding what’s most suitable and affordable at this stage of life.

In the article, lifebuzz.ca will provide all of knowledges for life insurance at 50 in canada for the viewers.

Why is Life Insurance in 50 important for Canadian ?

Over 27 million life insurance policies are in force across Canada, with over $8.3 trillion in coverage. The average policyholder is 50 years old. So it’s straightforward life insurance remains relevant at this age. Here are some of the top reasons:

Final Expenses and Debts

The average Canadian funeral costs $6,000-$12,000—even cremations average $3,000-$4,000. This sudden expense could burden your family if you passed away without life insurance. Life insurance provides a tax-free death benefit to cover final costs.

Canadians 50-54 have an average debt load of $70,000. This includes mortgages, credit cards, personal loans, and more. When you die, your debts won’t disappear – someone still has to pay them. Life insurance can pay off debts, so they don’t fall on your family.

Estate Taxes

Estates worth over $5 million in Canada may owe taxes upon death. Rates range from 15% on amounts over $5 million to 30% on assets over $15 million. If your net worth is high, life insurance can provide funds to pay estate taxes so your heirs receive their entire inheritance.

Spousal Income Replacement

If you died unexpectedly, would your spouse’s income be impacted? The loss of your salary could significantly reduce household earnings. Life insurance creates an income source to replace your earnings for some time. This income replacement is crucial if your spouse relies on you financially.

Leave an Inheritance

Perhaps you want to leave an inheritance to children or grandchildren. You may have specific assets you want passed down. Or you could fund college costs for grandchildren. Life insurance benefits can help fulfil these estate planning goals.

How Much Life Insurance Coverage Do You Need at 50?

The right life insurance amount depends on your specific financial obligations. With kids growing and expenses changing, you likely need less insurance now than when you were 30. But some coverage is still prudent. Consider these tips:

• Pay off debts – Add up mortgage, loans, and credit cards and cover the total. This ensures your family isn’t burdened.
• Final expenses – Funeral costs, probate fees, and expenses to settle your estate. Target $15,000.
• Estate taxes – If your assets exceed $5 million, estimate potential estate tax liability.
• Spousal income – Estimate your income and the amount needed to cover lost earnings.
• Inheritance – Decide if you want to leave an inheritance and how much.

A licensed advisor can help analyze needs and recommend appropriate limits. But $100,000 to $500,000 is typical for Canadians in their 50s.

Term Life vs. Whole Life Insurance at 50

Two main types of life insurance exist – term and whole life. Which one is right for you at 50?

Term Life Insurance at 50

Term life insurance covers you for a set period, such as 10 to 30 years. It only pays a death benefit if you pass away during the term. Key advantages include:

• Low cost – Term life is the most affordable type of policy at any age. Premiums are lower because death benefits are only paid if you die during the term.
• Customizable terms – You can match the term length to your specific needs, like covering until kids are adults or a mortgage is paid off.
• Guaranteed premiums – Your premium is “locked in” and cannot increase during the term as you age. This helps keep costs predictable.

Term life insurance is well-suited to protecting against lost income or final expenses. A healthy 50-year-old receives a 20-year term policy for under $50 monthly.

Whole Life Insurance at 50

With whole life insurance, coverage is a lifetime. The policy accumulates cash value, and you make set premium payments until you pass away. Benefits include:

• Lifelong protection – Whole life policies pay a death benefit whenever you die, even past age 100.
• Cash value growth – A portion of premiums goes toward building cash value you can borrow against.
• Fixed premiums – Premiums remain constant year after year and cannot be increased.

The main downside is the high upfront cost. Whole life premiums are 5-10x higher than term policies. This makes it unaffordable for many 50-year-olds. But it can complement term life insurance if you have the budget.

Finding Affordable Rates with Health Conditions

Your health is the most significant factor influencing life insurance rates. In your 50s, it’s common to develop conditions like high blood pressure, diabetes, or high cholesterol. How do these impact your options?

• Minor conditions may have little impact – Especially if well-controlled through medication and lifestyle. Disclosing them is required.
• Higher risk conditions raise rates – Conditions like heart disease or cancer cause higher premiums. Declining coverage is possible.
• Look into guaranteed issue policies – Some “simplified issue” life insurance in Canada doesn’t require medical exams. This avoids higher-rated premiums, but death benefits are lower ($25k-$150k).
• Re-apply after time has passed – Once a health condition has stabilized for 1-2 years, re-applying often leads to better rates. Improving health can also help reduce premiums.
• Consider group or sponsored plans – Check if you can access group life insurance through work or associations. This is issued with less underwriting.

The best way to find affordable life insurance at 50 is to work with an independent broker or life insurance agent in Canada. They can shop multiple insurers and find you the lowest rates for your situation.

How Much Does Life Insurance Cost at 50?

Here are some examples of average term life insurance rates for a 50-year-old in good health:

• Ten-year term – $30-$60 per month
• 20-year term – $40-$100 per month
• 30-year term – $100-$250 per month

These assume a policy amount of $250,000, but you can also find budget policies for under $25/month.

Whole life insurance is far more expensive, often $300-$1000 per month for $250,000 in coverage from age 50.

An online comparison tool can give you quotes from over a dozen insurers. Comparing rates from at least five providers ensures you find the most competitive premiums.

Tips for Buying Life Insurance at 50

If you’ve decided some life insurance is right for you in your 50s, here are a few tips for purchasing a policy:

• Consider decreasing your policy amount – With fewer years left until retirement, you may not need as significant a death benefit.
• Get quotes for both term and whole life – Compare options to see which works best for your budget and needs.
• You still have plenty of great options – Even with health conditions, you can find reasonably priced coverage.
• Discuss benefits like accelerated death benefits – Many policies offer the option to access benefits if terminally ill.
• Review in five years – Revisit your coverage needs around age 55 as they may decrease heading into retirement.
• Buy from a reputable, financially sound insurer – Choose a company that will be there when your family eventually needs to file a claim.

Is There Ever a Scenario When Life Insurance Isn’t Needed at 50?

While most Canadians can benefit from some life insurance in their 50s, there are specific scenarios where coverage may not be necessary:

• You have zero debt and very minimal final expenses.
• You have extensive wealth, and liquid assets exceed your estate tax threshold.
• Your spouse has adequate retirement income without you.
• You have no desire to leave an inheritance.
• You have lifelong coverage from a policy purchased earlier in life.

Unless all of the above apply, some coverage is wise for most 50-year-olds in Canada. An exception may be if you have a terminal medical condition, as most life insurers will not issue new policies under those circumstances.

Frequently Asked Questions

Does life insurance get more expensive each year after 50?

Yes, life insurance rates will gradually increase each year you age. However, if you lock in a term life policy, the premium remains constant for the length of the term. With whole life insurance, premiums are fixed at the time of purchase and won’t go up.

Should I tell my life insurance company about my medical conditions?

When applying for life insurance, it’s important to fully disclose any medical diagnosis, prescription medications, or other health history. Failing to disclose pre-existing conditions could allow the insurer to deny a claim later.

Is term or whole life better at age 50?

For most Canadians, term life insurance is more suitable and affordable at 50. It provides temporary coverage to protect your family during crucial years leading up to retirement. Life is expensive at 50 unless you have ample discretionary income to commit to lifelong premiums.

How long of a term length should I get at 50?

Popular term lengths are 10, 20, or 30 years when purchasing in your 50s. Choose a term that meets your needs, like covering until retirement, kids are self-sufficient, or other debts/expenses have lessened.

Can I still buy life insurance after 60 or 65?

Yes, you can buy life insurance over 60 or 65. However, costs are much higher and may require a medical exam. Term life policies have shorter maximum lengths, like 10-15 years. But some coverage is still attainable if needed.

Determine If Life Insurance Fits Your 50s Game Plan.

You are reaching the prominent 5-0, which means reevaluating your financial priorities. Protecting your loved ones with life insurance likely remains an essential piece of the puzzle. While needs decrease as kids grow up and retirement nears, essential benefits like final expenses and debt coverage remain.

The key is reviewing your specific situation – both family and finances. This helps determine an appropriate amount of coverage. Finding an affordable policy involves researching multiple carriers and having a skilled broker shop for the best rates.

While hitting the half-century mark signifies you’ve crossed life’s midpoint, the remaining years ahead are no less important. Seeking out some life insurance protection can provide peace of mind your bases are covered as you embark on your 50s.