Alert
Close

Think you know AARP? What you don't know about us may surprise you. Discover all the 'Real Possibilities'

Highlights

Open

Contests and
Sweeps

Dream Vacation Sweepstakes

10 weeks. 10 amazing trips. Seize your chance to win!
See official rules. 

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

PROGRAMS

AARP Foundation Tax-Aide

You can get free, face-to-face tax assistance nationwide.

Money Matters Tip Sheets

Download and print out these PDFs to help with your financial matters.

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

webinars

Learn From the Experts

Sign up now for an upcoming Money webinar or find materials from a past session. 

Jobs You Might Like

most popular
articles

Viewed

Commented

Smart Money Moves to Make by Age 50

5 useful tips to get your personal finances in order

One consideration could be converting your term policy into permanent life insurance. Whole life or permanent insurance policies, while significantly more expensive than term insurance, offer the flexibility of tapping into the policy’s cash value while you’re still alive.

You can borrow against the cash value of the policy’s death benefit, or just elect to take money from the policy, and lessen the death benefit payout. But be careful if you make that move. “Be aware that if you’re depleting your cash value [in a whole life policy], and it’s not considered a loan, that’s going to be a taxable event,” says certified estate planner Jean Dorrell.

One unique benefit of a term life policy that is convertible to permanent insurance is that it lets you retain your current health status through the life of the policy. According to Simbro, this means your term policy allows you to change the policy to permanent insurance “without going through underwriting again.” That means no new health exam.

That’s critical, because the younger you are when you buy permanent insurance, the cheaper it is.

3. Lock in long-term care coverage.

“Buying long-term care while you’re healthy and locking in your insurability is way easier at age 50 than, say, age 75,” Simbro says.

Waiting to purchase long-term care insurance can mean substantially higher premiums. Research from Northwestern Mutual shows that a man or woman buying a long-term care policy at age 50 could pay an annual premium of $3,302. But delaying the purchase for a decade would wind up costing the same person $6,678 annually — more than double the age 50 rate. Waiting to buy at age 70 would result in an annual premium of $17,760, according to Northwestern’s data.

And don’t mistakenly believe, as many people do, that long-term care coverage is only for 80-year-olds. In reality, about 40 percent of Americans receiving long-term care benefits are between the ages of 18 and 64, according to the Department of Health and Human Services.

But what if you still think you can’t afford long-term care insurance?

Simbro suggests tapping into the “living benefits” that your permanent life insurance offers.

“You can annuitize permanent life insurance,” he says, using the cash value as a way to generate an annual retirement income stream. You can also use either the cash value or the dividends from life insurance to directly fund your long-term care premiums, Simbro says.

As with life insurance, long-term care coverage can vary greatly based on where you live, family history and how long you want the coverage to last.

“Don’t presume there’s a one-size-fits-all amount that everyone should have,” Simbro says.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Related Video

Financial expert Jane Bryant Quinn says many people aren’t well positioned for retirement because they didn’t have a realistic plan. Hear her advice on what you need to do before taking a leap. Watch

Tell Us WhatYou Think

Please leave your comment below.

your money

Discounts & Benefits

Explore Your Learning Possiblities