How much life insurance do you really need? That depends on many factors, one of which is your age. While you should feel secure knowing your life insurance policy will be there to protect your family over the years, it’s important to periodically re-examine your insurance needs. The policy you purchased when your kids were born may not be the right coverage for you during retirement. Here’s a look at different life stages and how they can impact your need for life insurance.
Life Insurance in Your 20s
So you’ve entered the “real world” — have your first job, a place of your own and are financially independent. In your 20s, life insurance may be the last thing on your mind. You probably know you’ll need life insurance — someday. But one of the biggest misconceptions about life insurance is that you don’t need it when you’re young and single. Not true. You may want to buy a life insurance policy if you:
- have started a family
- tied the knot
- provide financial support to a parent and/or spouse
- have private debt, like student loans, car or mortgage
A life insurance policy can help cover debts, so co-signers or joint account holders won’t be responsible should the worst happen. Life insurance is generally pretty inexpensive for young adults. Buying life insurance when you’re young and healthy can ensure that you benefit from a lower premium.
Coverage in Your 30s
Now that you’re in your 30s, you’ve probably experienced one, two or five “big” life changes. Whether you got married, started a family, landed a fancy new job or bought a house, these are all big changes and you’ll want to make sure your life insurance is keeping up.
- New job: Starting a new career may not seem like something you need to consider when you’re evaluating your life insurance needs, but often new jobs come with a salary change.
- Children: The need for life insurance increases with children because ensuring your family is taken care of is likely very important to you, should the worst happen. Life insurance can cover funeral costs and provide income to pay expenses after you’re gone.
- Buying a home: As you’ve grown older, your priorities have likely changed. Perhaps you’re ready to move from renting to buying your first home. According to a survey by the National Association of Realtors, in 2016, the median age for first-time homebuyers was 32. Buying a home is exciting, but can be a big expense. If something should happen, you’ll want to be sure your family can stay in their home.
Life Insurance in Your 40s
As your career has become more established, your income has likely increased compared to what you were earning in your 20s and 30s. When your income grows, it’s a good idea to look at your life insurance coverage to make sure it will provide protection that keeps pace with your lifestyle.
However, not all life changes call for increasing your life insurance. If you’ve paid off debts — car loan, mortgage, private loans — or your children have moved out, your life insurance coverage can likely be adjusted. You may be able to afford a permanent life insurance policy now. Certain types of life insurance policies build cash value over time that can be used as a form of supplemental retirement income.
Life Insurance Coverage After 50
As you get closer to retirement, your life insurance needs have likely changed. It’s a good time to consider a daily living rider. With a daily living rider, you can choose to receive a portion of your policy’s death benefit as a way to provide some financial support if you become chronically ill or are unable to perform two of five essential tasks of daily living — eating, toileting, transferring, bathing, dressing and/or continence.¹
On the other hand, if you’re debt-free, no longer working and your children are financially independent, you may be able to reduce your coverage.
We Can Help!
As your world changes, your life insurance needs will as well. Our life insurance calculator can help you determine how much coverage you may currently need. Schedule a SuperCheck with your Farm Bureau agent to ensure you have the right amount of coverage. We offer three types of life insurance: term life, whole life and universal life. Check with your Farm Bureau agent to see which type is right for you!
¹Life insurance and its riders can provide some financial protection in your later years, but should not be viewed as a replacement for long-term care or disability income insurance.