It’s no secret that insurance companies assess the inherent risk and anticipated cost of each prospective policy. As such, your stage in life is always a major concern when it comes to making life insurance plans. How old you are, of course, statistically ties into the existence of pre-existing health conditions and will therefore influence the kind of rates you have available to you.
Let’s discuss in greater detail how much you should invest in your life insurance plans based on your age.
Life insurance during your 20s
As you might imagine, it’s all too easy to qualify for low life insurance rates when you’re this young. After all, you’re far less likely to be burdened with medical problems and, accordingly, don’t have a pressing need for comprehensive coverage just yet. That all changes when you begin to accumulate assets and dependents.
One of the best things you can do for your loved ones is to make sure they are protected and secure.
Young adults in their 20s often have lots of affordable options that they will probably never have access to again. We highly encourage consumers to start a plan 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, though many of today’s young people are not taking advantage of this opportunity.
During your 30s
The need to have a financial safety net in place increases as you reach your 30s. By this point, more and more people have begun to start families and purchase homes, leaving countless households extremely vulnerable if tragedy were to descend. 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 hewing 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 plan is definitely a worthwhile investment. It provides support for your loved ones once you’re gone, and though the level of investment you’re able to commit to may change over time, just knowing that your family’s finances will remain secure in your absence will more than justify the time, energy and money you put into researching, establishing and maintaining your life insurance policy.
We can’t stress enough the value in getting started as early as possible. Yet, even if you’re already in your later years, the benefits of a robust life insurance plan are clearer than ever.
Do you still have questions about how to manage a new or existing policy? Let us know in the comments section so that we can help!
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