When to get life insurance

Why timing matters for life insurance

Your age plays an important role in determining your life insurance options. The cost and the term of policy that may be ideal for you depend on your age and life stage. If you choose term life insurance, your age impacts the length of time you’ll need coverage. For example, if you’re in your early 30s and starting a young family, you may need 20 or 30-year coverage that replaces your income to protect your children until they become financially independent. This is in contrast with a 60 year-old woman who may want a small policy to cover burial and funeral expenses.

How age impacts life insurance premiums

Typically, life insurance premiums increase with age. The reason is simple: as you age, your lifespan decreases. It’s possible to pay extremely low premiums to insure a healthy child. However, it can be much more expensive and difficult for someone in their 60s to secure affordable life insurance.

Age and health correlation

Generally speaking, more health challenges come with age. These can be genetic disorders that manifest at an older age or lifestyle-induced health problems but, either way, they represent an increased risk to life insurance companies.

Premiums increase with age

Health challenges and advanced age represent a shorter lifespan, which translates to greater risk for insurance companies, therefore driving premiums higher to compensate the company for the additional risk they are assuming. According to Bankrate, a 30 year-old pays nearly a fourth of the cost of a 50 year-old for identical coverage.¹

What age should you get life insurance?

There is no specific age when it’s ideal to get life insurance. However, different stages in life typically come with different needs to protect loved ones. Consider life insurance as part of regular financial planning. Here are some things to think about when considering the importance of life insurance in different life stages.

In your 20s: Building the foundation

While you may not feel the pressing need for life insurance in your 20s, if you’re still single and without children, this can be a great time to lock in low premiums while you are young and healthy. In addition, having life insurance at this time in your life can help your parents pay off things like student loans and burial expenses, relieving them of financial burden at an incredibly difficult time if you were to pass away unexpectedly.

In your 30s: Preparing for family life

Your 30s can be filled with lots of exciting milestones and new responsibilities, which may include getting married and starting a family. This is a time when life insurance becomes more critical. If something were to happen to you unexpectedly, your spouse and children would likely need financial support to be able to continue living in your home with your current standard of living. Typically, this requires securing more coverage. You may need the death benefit to cover paying off the mortgage on the house, replacing your income for a reasonable amount of time, or perhaps paying to outsource things like childcare, driving and house cleaning to free your surviving spouse to grieve and establish a new life.

In your 40s: Securing your assets

In your 40s, your children may be reaching a more self-sufficient age, but at this time, you’ve likely accumulated some assets and established a lifestyle that you’d like your loved ones to be able to maintain. Securing your assets may mean ensuring there are enough life insurance proceeds to pay off a mortgage on a house, or to pay back a small business loan you may have taken out to fund an entrepreneurial venture. It may also mean investing in a permanent life insurance policy to help guard against having to liquidate assets in your estate in order for your loved ones to pay taxes upon your death.

In your 50s and beyond: Estate planning

As you near retirement, the day-to-day financial burdens of caring for a family may have subsided. However, as you look closer at end-of-life planning, you may wish to invest in a life insurance policy to cover funeral and burials expenses so that your family doesn’t have to assume this financial burden. You may also wish to invest in a policy to cover end-of-life healthcare expenses that you may have incurred and to provide some funds for a surviving spouse to live out the remainder of their years in comfort. If you have not yet begun legacy planning, securing life insurance at this time may help protect the value of your estate and/or enable you to leave a legacy of generosity to a cause that is important to you. It’s a good idea to consider life insurance in the estate planning process.

Life events that signal it’s time for life insurance

There are many life events that should trigger a review of your life insurance coverage. Here are some of them:

Starting a family

Starting or adding to a family, whether through marriage, birth of a child, adoption or remarriage to someone with their own children, a growing family means more people who would require financial support if you were to pass away. For this reason, it’s important to evaluate the need for an amount of life insurance as you grow your family.

Purchasing a home

Your home may be the largest asset you ever purchase. Most likely, you will take out a mortgage to pay for your house over time. If you were to pass away and your spouse struggled to earn enough on their own to cover your family’s financial obligations, they may have to move out of your home to seek more affordable housing. The death benefit from a life insurance policy can be used to pay off the balance of your mortgage, allowing you family to stay in the house.

Planning for retirement

Whether you seek to ensure an aging spouse can live comfortably and afford healthcare for the balance of their life, or if you’d like to provide the funds to cover your funeral and burial expenses so your loved ones are not burdened with the expense, life insurance can help provide financial security during your golden years.

Common mistakes to avoid when deciding on life insurance

While buying life insurance can be a relatively simple process, there are some common pitfalls that can result in failure to secure the coverage that best meets your needs. Sometimes individuals start to think about life insurance as they reach the end of their life. The older you are, the more difficult and expensive it can be to get life insurance coverage. The younger and healthier you are when you buy life insurance, the lower the premiums you’ll pay. For this reason, there are benefits to buying life insurance when you are young.

Another common mistake is choosing the wrong type of policy. When considering life insurance, it’s important to clearly specify your goals. Are you seeking lifelong coverage? If so, a term life insurance policy may not be the best way to meet your needs. If you have young children, a 10-year term policy may not provide coverage for long enough to ensure your children are financially independent.

It’s also common to underestimate your coverage needs. It’s a good idea to make a list of the most critical financial needs and the financial resources required to allow your loved ones to maintain their current lifestyle in case of your untimely death.

How to get life insurance

The process of applying for life insurance may not be as complicated as you think. You will be asked to submit some paperwork, which includes personal and financial information. You will also be asked to complete a medical history form. Depending on the type of policy and the particular carrier, you may be asked to undergo a phone interview to collect additional details and/or you will be contacted to schedule a medical exam. Often a medical technician can be sent to your home or office or you may choose to visit a lab. All of this information is used to determine your eligibility and premium costs.

Key takeaways: Secure your future today

In conclusion, there is no perfect time to get life insurance. However, it’s good idea to consider different insurance needs at different stages in life. If you’re uninsured, take a few moments to consider those who would be impacted most if you were to pass away unexpectedly. You may also want to consider if you may need life insurance later in life and how buying life insurance while you are young and healthy could help lock in lower premiums.

Because calculating how much life insurance you need can be tricky, it may be wise to consult a financial professional to do some financial planning and compare policies to determine what option would be best for you.

Are you ready to explore your options? Visit the Protective Learning Center to learn more about how to get life insurance or get a term life quote from Protective today.

Sources:

1. Bankrate, “Life insurance rates by age,” November 13, 2024.