As you grow older, you’ll hopefully accumulate some level of wealth. Having wealth and financial prosperity isn’t always just having cash in the bank. It can be anything from stocks, bonds, other investment opportunities, and the home and property you live at or own. In other cases, it might even be the income you enjoy from your career.
You rely on all of these to pay your bills, keep a roof over everyone’s head, and put food on the kitchen table. In due time, you’ll hopefully even come to enjoy travel and leisure while providing for your family.
However, what if something happens to you? What will take care of your family then? This is where life insurance comes into play.
If you don’t have life insurance right now, you should consider a policy as quickly as possible. Additionally, if you already have a life insurance policy, make sure you’re not part of the 20 percent of underinsured life-insurance customers. To learn how to obtain adequate coverage without submitting to a health exam, check out this article from DoughRoller to see the many options available to you.
Why Do You Need Life Insurance?
If you’re still employed in a traditional career model, which happens less and less these days, then you might get basic life insurance coverage as part of your employee benefits. Such policies typically cover the costs of funeral or burial expenses in the event of your death, which spares your survivors’ unnecessary stress in their time of grieving.
Also, nearly any policy should provide financial support for your family if your income is lost due to your death. Even if you’re self-employed or part of the so-called gig economy, you need to make sure that you have life insurance coverage that provides some kind of financial cushion for your loved ones.
Life insurance does far more than that for most households though. Life insurance can be a savings and investment tool over the years. It can generate your financial wealth as much as protect it. You can even use it to manage your overall debt and possibly put your descendants through higher education, further securing their financial safety later in their lives.
What Kind of Life Insurance Do You Need?
The types and levels of life insurance you need should reflect your life circumstances at the time. Life insurance often changes based on your age and the stage of that life that typically represents.
Your Roaring 20s
If you’re single without kids in your 20s, you might not think you need life insurance. However, life can change fast, and this decade is when you can usually lock in the best possible rates for life insurance. You’re young, which means a payout isn’t likely to happen for a long time. Your health is probably the best it will ever be, which is just another reason life insurers would love to insure you.
Life insurance can be crucial here if you’re trying to start a family. The right policy can provide your spouse or partner with the financial means to keep paying for or renting a home, or your family can handle student loans they cosigned to get you through college or university and on your feet financially.
30-Somethings Have New Needs
Don’t just review your life insurance when you have another birthday, be it a new decade or just another year. Any major life event is cause for a good analysis of your coverage, and most people have plenty of them in their 30s. Be it a marriage, new cars, new home, more debt, kids, and big bills, your 30s is likely to be a culminating decade in life. If you haven’t done so already, start looking at past employer-provided policies. They often only pay out a year or two of your average salary, but your financial needs are probably way past that at this point. Look for a policy that covers as much as 15-to-20 years of your income, especially if you have a partner that would be raising kids without you. This becomes even more vital if your partner only works part-time or has a stay-at-home role while you’re the primary income earner in the family.
40s: Over The Hill Or Peak Of The Hill?
This is the decade of life where things might start getting complicated for you financially. You are possibly still paying off student loans and your first home, but you might also be looking at a bigger, newer, or forever home. It’s easy to get bogged down with worry about current childcare expenses, while also looking ahead to the looming college expenses one or more of your kids might wind up incurring. Your bills might be at their peak, but you also need to be saving for retirement at a stronger pace than ever before. Ensure your coverage is enough, but tweak the policy so that you don’t pay too much. Supplemental policies can make a great add-on here, especially if your health is still robust enough to keep your rates low–provided you don’t opt for a no-exam coverage like listed previously. If you still have excellent health, this is the last decade you can expect to get great life insurance rates reflective of that.
Your 50s Are The New 30s
This stage of life carries good news and bad news in terms of life insurance. Sadly, you need it now more than ever, and the previously cheap rates based on your age and health are going to start to disappear quickly. You might even find yourself facing a two-year moratorium on a new policy in which death benefits would not be paid out for the first 24 months of your life insurance policy. Employer-based coverage isn’t likely to cut it alone anymore if it was still an option at this stage.
The flip side is that while rates and premiums will go up, they’re not going to be obscene. Most consumers seriously overestimate how much life insurance will cost in their 50s until they look into it. At a stage in life where you need to protect yourself, your kids, your spouse, and your looming retirement all at the same time, you need to be prepared and ready for anything. This especially holds true if you haven’t saved up a serious nest egg along the way.
The Golden 60s
This is the time to maintain having life insurance coverage and possibly start paring it back a bit. Depending on who is still financially reliant on you, if anyone at all, you might be best off with policies ranging from 10 – 20 years in length. This can still be had for roughly $100 a month or even less, making them affordable for the peace of mind that they bring. Interestingly enough, if you don’t have anyone still relying on you financially, then dialing the life insurance down even more might make sense. This way you can dedicate the money to sheer savings or investments instead of paying premiums. There’s nothing wrong with spoiling the grandkids a bit either.
To The 70s And Beyond
Hopefully, by the time you get to this age, you’re well into retirement or only working because you want to stay active and love what you do. Even better, your kids likely are financially secure on their own, and you get to worry more about getting time with grandkids than about their financial security. Many seniors assume that they can start paring down their life insurance at this stage of life and possibly even do without, but this is far from the case. If you’re in a retirement or downsizing stage, your income will likely be limited and possibly even fixed. The right life insurance policy is necessary to handle a possible loss of income and potentially even medical and health costs. One-third of all health care spending happens in the golden years of life, making it very expensive. Term life insurance and whole life insurance both play crucial roles for seniors.
Life insurance is something that not everyone has, but everyone needs. Even some who have it don’t have the right level of coverage, and those that do should consider rebalancing their policy based on their age and life circumstances. Life insurance not only protects your family from loss of income and wealth and sudden funeral expenses in the event of your passing, but it can also serve you. At the same time, you’re still alive and providing sources of savings, investment, and even educational funding.
Regardless of your age, if anyone is financially dependent upon your income and possibly wealth, then you need life insurance to protect them if you can’t.