Is life insurance worth it as you age?

Life insurance can play a vital part of any financial strategy and be a critical means of protecting your loved ones should something happen to you. While typically thought of as a protection strategy for younger individuals, life insurance can continue to be important as we age.

Why life insurance is beneficial at an older age

Even as you age, your loved ones could still be financially affected should you pass away prematurely. For example:

• You might have a spouse or partner who depends on your income and would be impacted if you missed your last working years (when you could be at your peak earnings and/or saving more for retirement).
• You might be providing care for a loved one, like an aging parent or spouse, who will need to replace care if you pass away.
• You might have outstanding debts that might affect your loved ones (e.g., it's not uncommon to still have a mortgage at an older age).
• You might have older kids in college who rely on you to cover education expenses.

How much coverage do you need? Use L-I-F-E as a guide

Start by calculating the needs of your loved ones after your death using L-I-F-E:

• Liabilities — Pay off your liabilities (including your mortgage, car loans, student loans, credit cards, etc.).
• Income — Replace your lost income (including unpaid labor, such as housekeeping, childcare or caregiving).
• Final expenses — Cover any final expenses related to your death.
• Education — Pay for your children’s education costs (if desired).

Then, subtract any resources that will be available to them for those needs (such as 529 savings accounts intended to fund education or Social Security survivor benefits). Your life insurance should cover any gaps between the two.

Your Edward Jones financial advisor can help you calculate the amount of coverage that's right for you. Our life insurance calculator can also help with your calculations.

What type of life insurance to buy: Term vs. permanent

Once you’ve determined your coverage amount, the next step is to decide whether a term or permanent policy is right for you.

Term insurance:

• Lasts for a set period of time, such as 10, 20 or 30 years
• Has no cash value accumulation or additional features

Permanent insurance:

• Can last your entire life (as long as premiums are paid)
• Has the potential to accumulate cash value and may offer additional features, such as variable premiums or long-term care coverage

In most cases, you'd want to protect your loved ones for a limited period (such as until retirement), and term insurance is generally the most cost-effective way to do this. So, we recommend starting by looking into a term policy.

But this doesn't mean that term insurance is the right solution for everyone. You might want to consider a permanent policy if you anticipate that your loved ones’ needs won’t decrease over time (e.g., if you’re caring for a loved one with special needs), you’re interested in using your policy for additional goals (such as estate planning or long-term care), or you like the additional features and flexibility these policies offer.

Individual vs. group coverage

Your options for coverage include buying an individual life insurance policy through your insurer of choice or using your employer’s group life insurance policy if you're still working and one is offered. Each option has its own pros and cons.

A group plan is typically cheaper and doesn’t require underwriting. However, compared to an individual policy, they tend to offer limited coverage amounts and fewer policy options (usually only term insurance from one provider). Importantly, if you leave your job, coverage will generally end. So, if you are concerned about maintaining coverage after a job loss, you need more insurance than your group coverage offers, you want different features, or you're worried about qualifying for insurance later in life, you might want to consider getting an individual policy to supplement or replace group coverage.

How Edward Jones can help

Your Edward Jones financial advisor can help you understand how much coverage you need and what type of policy is best for you. Also, they can help periodically review your life insurance to make sure your loved ones remain protected as your needs change over time.