'20 year ~$76/mo vs 30 year ~$120/mo': Late to life insurance at 49 and facing a chronic illness. Which term should I choose to secure my loved ones' future?

Hi Money Minder, I’m kind of late to the life insurance game and I need some guidance. I’m torn between a 20-year plan and a 30-year plan, and I need some perspective. I can’t rely solely on investments to leave behind since I have a chronic illness and I’m playing catch-up.

Insurance Quote / $200k coverage:

20-year plan is around $76 a month (total cost after 20 years is about $18k).
30-year plan is about $120 a month (total cost after 20 years: around $35.5k // total cost after 30 years: around $43k).

My Info:
Age: 49
Retirement: about $50k (I’ve been sick for a while but recently got back to work)
Saving: putting $800 a month into retirement
Income: $70-80k
Beneficiaries of the insurance:
1. Primary: elderly parent who relies on me (this is mainly for them). This could provide about $3334 a month for 5 years.
2. Contingent: sibling of a similar age & their kids (nice to have)

See you soon Money Minder!

Response from THE MONEY MINDER:

Hello There,

Hello, it’s commendable that you are considering life insurance options despite the challenges you are facing. Given your circumstances, a practical approach would be to weigh the costs and benefits of both 20 and 30-year plans. The 20-year plan seems more cost-effective in the short term, with lower monthly payments and total costs over 20 years. However, the 30-year plan provides longer coverage and may be more suitable considering your chronic illness and the need to support your dependent parent for a longer period.

Given your retirement savings and current income, it’s important to ensure that the insurance plan aligns with your financial goals. The primary purpose of the insurance is to provide financial support to your dependent parent, so it’s essential to factor in their needs and the income they may require. While the contingent beneficiaries are also important, your primary focus should be on securing the financial well-being of your dependent parent.

It’s crucial to consult with a financial advisor who can offer personalized guidance based on your specific situation. They can help you assess your overall financial health, determine the appropriate coverage amount, and choose the most suitable term for your life insurance policy. Additionally, they can provide insights on how the insurance may complement your retirement plans and address any gaps in your financial strategy.

In conclusion, take a practical and realistic approach when deciding between a 20 or 30-year life insurance plan. Consider your current financial situation, the needs of your dependents, and seek professional advice to make an informed decision. By carefully evaluating your options and seeking expert guidance, you can ensure that your loved ones are financially protected in the long run.

Farewell from THE MONEY MINDER.