Seven in ten Canadians, or 70% of Canadians over the age of 35 have life insurance. Half of them reported purchasing it on their own and a quarter have both coverage through work, as well as their own private policies.
Many people view life insurance as a safety net for their families. But, life insurance can be so much more than simply death benefits.
Life insurance can be a financial investment that also provides policyholders with financial benefits during their lives.
Some people also don't understand how life insurance can help their families in the event of their death. It isn't just a lump sum of money they get to pay for your funeral.
Buying life insurance can seem like a daunting task at any age. But, if you understand how it can benefit you and your family, then it will seem like a less burdensome and challenging task.
So whether you're 20 or 60, our ultimate guide will help you to decide what kind of life insurance coverage you need and how to get the best rate. Read on to discover why buying life insurance is a financially sound decision at any age.
Buying life insurance for your newborn infant is really an investment in the future. By purchasing a whole life policy for your infant, you can take advantage of cash-value savings embedded in the policy.
When the child turns 18, the policy can then be put into their name. The tax-deferred cash-value that's accrued over the years from paying the premiums can then be withdrawn by the policyholder. Your child can then use this cash value to pay for a down payment on a home.
The policy can also continually be funded and the cash value used for retirement income. This makes purchasing life insurance at this age a smart, long-term investment. However, as the child ages and debts accrue they may be interested in seeking out another less expensive life insurance policy.
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In your 20's is obviously the best time to buy life insurance. You won't find more affordable life insurance then when you are young and healthy. The benefit of purchasing life insurance in your 20's is that you will lock those rates in for life. As an example, a $500,000 policy for a 25 year old will cost a non-smoking male an average $23.71 per month, and a non-smoking female around $15.18.
The 20's for a young person are a time of change. Some people in their 20's just graduated from college and are seeking out a career. Others in their 20's may decide to get married and have young children.
This is also a time when people are deciding if the timing is right to purchase a home.
Two factors that influence life insurance policy coverage are income and debt. But, it's extremely important to get life insurance if you have young children and a family who would need your financial support in the event of your death.
Even if you are a stay-at-home parent, in the event of your death your spouse will need to adjust their financial responsibilities. They will then need to invest in childcare in your absence which would be an additional financial burden.
Luckily, life insurance for people in their 20's is inexpensive. People in their 20's are usually in good health and can get the lowest rates.
In your 20's you can invest in a whole life policy or get term life insurance. Term life insurance lasts for a period of time, 20 or 30 years typically, and then expires. When the policy is due to expire you can either extend your coverage, transfer it to a permanent policy, or purchase a whole life policy.
A rule of thumb in your 20's is to purchase a policy that is four times your household's annual income. You'll want to add more coverage if you have children and a spouse, however.
3. The 30's
There are multiple reasons folks in their 30's should buy life insurance. You have families, you make more money or may owe some too, being just a few. The best part about purchasing now, is that for non-smokers, the rates are similar to people in their 20's. A male can expect a $500,000 policy to be priced around $22.50 and a female would cost about $16.74 per month.
People in their 30's typically make more money and have accrued more debt. They have potentially made larger investments like buying a house which means they'll need to purchase a policy to cover these debts.
The general rule for people in their 30's is to purchase a policy ten times the amount of their income. This policy should be able to pay off your mortgage and other debts, help your spouse financially, and help your children to pay for college.
Buying life insurance in your 30's is still inexpensive because most people in their 30's are still healthy. It's important to get life insurance while you're still healthy to avoid higher rates or being denied outright.
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The reality is, this is when the subject of life insurance comes up more regularly. Children are getting older, many people are well into their mortgage payments with plenty still to be paid. Also, people start thinking more about the rising costs of funerals, paying off debt and leaving inheritances for their loved ones. A non-smoking male can expect to secure a policy for approximately $42.34 per month and non-smoking female will pay around $29.25.
Your 40's are still a great time to buy life insurance. People in their 40's are generally still healthy, but when you reach your 50's your health status may change.
If you haven't purchased a life insurance policy yet, now is the time to do so to get the best coverage and affordable rates. It's also a great time to evaluate your current life insurance needs if you have an existing policy. You may need additional coverage or less coverage depending on your income to debt ratio.
5. The 50's
This is an interesting time as people in their 50's tend to begin to reflect on the first half century of their lives and financial organization becomes a major priority. You may still have loved ones relying on your income, it could be almost time to pay off your mortgage or maybe you are just wanting to leave a nice little nest egg for your kids. But as health issues tend to become more prevalent in your 50's, insurance rates climb a bit. A non-smoking, 55 year old male can expect to pay around $97.83 for a $500,000 policy and a female would pay roughly $74.20.
For people in their 50's, it still isn't too late to get life insurance. Your rates may be higher, especially if you've experienced significant health problems, but you can still purchase life insurance.
Even though your children may no longer need to rely on your support, your life insurance can still provide them with a trust or a liquid asset for your estate. It's important to thoroughly review your financial needs at this time and to consider what would happen if you or your spouse died unexpectedly.
While this is a difficult thing to imagine, being financially prepared in the event of death will be highly beneficial for finances.
6. The 60's
Let's face it, we are having kids much later in life these days. Many of us are in our 60's and still have kids in high school university and for that reason, a life insurance policy makes sense. Marital situations also change a great deal in our sixties and should we pass unexpectedly, we aren't always eligible to receive our partners pensions. If you haven't already, we do recommend securing your state of living and families well being with a life insurance policy. The prices though, tend to be on the higher side. For a $500,000 policy, a non-smoking will pay around $372.19 and a female can expect to pay $251.82.
It's best to purchase life insurance before you turn 65. Many life insurance companies simply won't provide coverage to individuals 65 and older. By this time, your debts should be lessened or nonexistent, so focusing on how life insurance will benefit your family and spouse is paramount.
Remember, if you don't have life insurance at this time, then your estate will be responsible for paying for your funeral and any other debts. Your spouse will also be solely responsible for paying off any co-signed debt that your estate doesn't cover.
10 Year Term Life Insurance Rate Chart by Age
The chart below outlines the prices discussed with the added feature of pricing for smokers as well. These rates are based on 10-year term policy with 500,000 amount coverage. More often than not, 10-year policies yield the lowest rates. Once the term is complete, assuming the policy is renewable, you'll see a slight increase in the annual rates.
25 - 20's
35 - 30's
45 - 40's
55 - 50's
65 - 60's
* These Life Insurance rates are the actual rates based on our own Life Quoter comparison system. Refer to the screenshots above.
Want to Learn More About Buying Life Insurance as A Senior?
Read our article about the questions you need to ask yourself before buying a policy.