The Ultimate Guide to Buying Life Insurance at Every Age

Posted on April 28, 2019

Only 59% of Americans have a life insurance policy. While 84% of Americans report that most people need life insurance.

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.

1. Infancy

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 The tax-deferred cash-value that's accrued over the years from paying the premiums can then be withdrawn by the policyholder.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.

2. The 20's

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

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.

4. The 40's

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

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

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.

Buying Life Insurance at Every Age

Buying life insurance at every age is a financially sound decision. We can never predict the future, but with a life insurance policy, we gain peace of mind.

When shopping for life insurance, make sure to compare rates. Make sure the life insurance agent thoroughly explains the policy with you and helps you to determine the coverage you need as well.

Need a life insurance policy and live in Canada? Get a quote now and discover the lowest life insurance rates in Canada.

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