Life Insurance Needs by Age

What you want from your life insurance policy will likely change as you get older. Here’s a look at how your life insurance needs might evolve through every decade.

Life Insurance During Your 20s

As you might imagine, life insurance rates are lowest when you’re young. After all, you’re far less likely to be burdened with medical problems and don’t have a pressing need for coverage just yet. That all changes when you begin to accumulate assets and dependents.

Young adults in their 20s often have lots of affordable options that they will probably never have access to again. It’s highly encouraged to start looking into life insurance at this age, even if you don’t invest very much in it upfront. The fact that you have an established policy at these lower rates will go a long way toward laying the groundwork for your financial future.

Hurricane Preparedness Guide

Learn how to prevent damage to your home, how to stay safe during a storm, when to evacuate and more.

Download Now!

During Your 30s

The need to have a financial safety net in place increases as you reach your 30s. By this point, more people have begun to start families and purchase homes, leaving more on the line if tragedy were to occur. Now is the time to begin or expand your policy according to your specific finances, taking into account lost income, expenses, debts and all future financial burdens.

While rates won’t be as low as in previous years, this is still a perfectly respectable time to start a policy. If you already have one, you might choose to add a second plan now or convert your term policy to whole. One popular philosophy dictates that you should buy at least 10 times the coverage of your annual income. Consider sticking as closely to this guideline as possible to fortify your family’s protection.

During Your 40s

This is the period in your life when having a life insurance policy starts to become a true necessity. In your 40s, most people have already begun to amass significant assets, and you’re still not too old to perhaps qualify for some decent rates. If you already have a plan, here’s when you definitely want to step it up according to your finances.

Therefore, how much you invest depends largely on your personal financial situation. Calculate the minimum amount of life insurance you should have by identifying the difference between your current resources and your expected financial needs.

In other words, your policy should equal whatever the amount of remaining funds you need to cover your income, expenses and debts (both current and anticipated). Just be sure to include a sizable margin of error.

During Your 50s and Beyond

Once you reach your 50s and beyond, your needs dramatically shift. As you enter the realm of senior citizenship, rates tend to skyrocket. Having a life insurance policy, of course, still provides the peace of mind you’ll especially crave as you get older, and in the short term, your policy could help provide coverage in the face of any lingering debts. Yet, because your life insurance policy is bound to be more costly now, you may need to adjust your plan accordingly.

If this is the case, you could opt for a term plan to find an affordable balance that can keep your policy active without harshly cutting into your resources. While they tend to be more expensive as you age, your life insurance plan could even be used to fund a trust or plan your estate’s future.

Looking to the Future

No matter how old you are, a life insurance policy is a worthwhile investment. Knowing your family’s finances will remain secure in your absence will more than justify the time, energy and money you put into it.

The value in getting started as early as possible can’t be stressed enough. Yet, even if you’re already in your later years, the benefits of having a robust life insurance plan are clear.

AAA insurance agents are happy to help with your life insurance needs. Reach out today. 

When did you decide it was time to get a life insurance policy? Tell us in the comments.