Life insurance isn’t for you. It’s for the people around you. If there are people in your life that would struggle if you suddenly disappeared, then you need life insurance.
We tend to stay young at heart, so it’s easy to keep putting life insurance off, one tomorrow at a time. Yeah, you can always go shopping for life insurance, but the longer you put it off, the more complicated it gets.
Complicated as in costly.
If you’re single and planning on staying that way, then this article isn’t for you. But if you have a wife at home with a new baby, then life insurance is a must: What would replace your income if you suddenly weren’t there anymore?
Term or Permanent?
Term Insurance will provide coverage for a certain term or length of time. New and expecting parents would want this term to last until their children are grown and no longer dependent on mom and dad’s income.
Term insurance is much like car insurance. It has a shelf life and the benefits are gone if you stop paying the premiums.
Permanent Insurance is going to be around as long as you’re paying the premiums.
One positive thing about permanent life insurance is that some of the money you pay accumulates as cash value. This cash will eventually be able to supplement retirement income and be taken out as loans.
Per the policy you go with, some of those benefits are still available to you even after you no longer pay.
Permanent insurance is divided into whole and universal.
Whole Insurance premiums are fixed for life. The premiums of Universal Life Insurance give you the luxury of adjusting the premiums and benefits-at-death as you go.
Do You Need Life Insurance in Your 20’s?
The irony of it: The best age to buy life insurance is the age at which nobody is thinking about it. Good health gets you the lowest premiums, and face it: Our 20’s are the healthiest we’ll ever be. At least for most of us.
You could be paying as little as $22.48 a month if you’re in your 20’s and in good health. Other factors could up that payment, but it wouldn’t be an astronomical sum.
You might be single and carefree now, but if you see a family and a mortgage in the future, shop for your insurance now so you can lock in an affordable rate down the road.
Can Life Insurance Wait If You’re in Your 30’s?
Do you know anyone in their 30’s that’s still single? How many of them can you count on one hand? Exactly. Most people have a family that needs every dime that comes through the door.
Yes, you likely have insurance through your employer. Great. But that’s like the complimentary breakfast at a hotel. It’s rarely enough.
This is also the life stage where most Americans are in debt for everything they own. You don’t want that debt to pass on to your children.
Finding Life Insurance in Your 40’s
Hang on. This is the time to start looking for an affordable policy before rates get too high. It’s also time to see your workplace insurance as a supplement.
If you purchased term life insurance in your 20’s, this could be the time that the policy is going to expire and you may be interested in extending that protection—read more here.
Things happen: mortgages take longer than planned to pay off, an extra child poofs onto the scene, or you just think your family would be better off with more protection.
The good news is that since Americans are living longer, affordable policies are still available. A healthy 45-year-old woman could land a term policy for $43.15 per month.
I Might Want Life Insurance Now That I’m in My 50’s
Time for a bit of harsh reality. You can get insurance. It just won’t be cheap. As the candle of life burns shorter, the longer the shadows of premium prices.
Still, better late than never. There might be a mortgage or other debts that could be around a long time. There could also be a spouse or a loved one who cannot work now that they’re approaching their golden years.
Term policy premiums approach the $60 and $70 ranges at this point. The only drawback to not getting a policy now is facing the prices that come from waiting even longer.
Shopping For Life Insurance in Your 60’s
Yes, it’s possible. Yes, there are affordable options. But it isn’t wise to wait this long.
It also becomes unrealistic to look for term policies that will go over 20 years. 10 to 15 years is more realistic.
Again, if there is a spouse or children in the picture, the investment will be a wise one. Your spouse will especially thank you if they depend solely on your income.
The Bare Bones of Shopping For Life Insurance
That was a lot of information to wade through. So here is everything down to the lowest common denominators.
- Multiply your annual income by the number of years that you want to be covered.
- Add any fixed expenses like college tuition for your children.
- Subtract non-retirement savings and investments that could cover some of your expenses alongside an insurance benefit.
Then, you shop around for the best policy with the most reasonable quote.
Life insurance ain’t sexy, but neither is all the debt and hardship that could be passed on to your loved ones. What’s that newborn baby going to do to pay off that Corvette if something happens to dad?
The best time to start looking is today and not a second later.
For life insurance advice for any age, visit Personal Finance by the Book.