How Much Life Insurance Should You Have as a 50-Year-Old?

There's no one right way to buy life insurance when you're 50. The exact amount of life insurance you should have at this age is based on a variety of factors, like your age, health status, income, and family situation.

Some 50-year-olds might have young children, and will want to get a term life insurance policy to provide coverage until their children are grown. Other 50-year-olds might want a whole life insurance policy that provides investment growth, as well as a death benefit.

Let's look at a few frameworks for how to make the best decision when buying life insurance as a 50-year-old.

Life insurance option No. 1: Replace your income

If you're 50, ideally you're at a point in your career where you're well-established and making good money. These might be your prime earning years. When buying life insurance, many people try to buy enough to help replace their income for a certain range of years.

For example, a typical rule of thumb is to buy a life insurance policy with a death benefit equal to 10 to 12 years of your income. So if you make $80,000 per year, you should consider getting a term life insurance policy with a total death benefit of between $800,000 and $960,000.

Term life insurance is often the best choice if you want the largest amount of death benefit to replace your income. That's because term life insurance premiums are much cheaper than whole life insurance. Based on The Ascent's analysis, whole life insurance premiums are usually five to 15 times the cost of term life for the same amount of death benefit. So for example, if you can qualify for a term life insurance policy with a premium of $100 per month, that same amount of coverage with whole life insurance would cost $500 per month -- or more.

Life insurance option No. 2: Pay off debt

If replacing your income is too expensive of a goal for your life insurance policy, you might want to consider a more focused target. Many people buy enough life insurance to pay off their loved ones' debt in the event of their premature death. For example, you could choose a life insurance policy with enough death benefit to pay off your family's mortgage, pay off your kids' college expenses, or other financial goals.

You don't always need to buy a $1 million life insurance policy to replace several years of income. Instead, you could find a more affordable term life insurance policy with a death benefit of (for example) $500,000 or less.

Life insurance option No. 3: Leave a legacy

What if your kids are already grown, your mortgage is on track to be paid off, but you just want to provide your loved ones with extra protection? Life insurance can help you leave a financial legacy. Whether you choose a lower-cost term life insurance policy with a shorter term, or a whole life insurance policy that gives you investment options, there are flexible ways to use life insurance for your family's goals.

For example, you could choose a lower-cost $100,000 term life insurance policy that would cover your children's educational debt or your grandchildren's college costs. You could also choose a universal life insurance policy with flexible options to invest in stocks or borrow money against the cash value of the policy. Life insurance doesn't always have to be about "covering your family's current expenses in case you die." The best life insurance companies can also help you plan your financial legacy and pay off debts for future generations.

Bottom line

If you're buying life insurance as a 50-year-old, pay attention to what your family needs now, and what your future financial goals might be. If your goal is to replace your current income in case of your death, buying lower-cost term life insurance could be the right move. Whole life insurance policies, like universal life insurance, can be the right choice for some situations, but be aware of its higher premium costs and lower death benefits.