Life Insurance Needs at Different Stages in Life

How much life insurance is enough? What’s the best type of life insurance? The answers to these questions depend on many factors, including your age, your life situation and your needs. When you're young, you typically have less need for life insurance. But that changes as you take on more responsibility and your family grows. Then as your responsibilities begin to diminish later in life, your need for life insurance may decrease.

Getting the most out of your life insurance policy means taking the time to periodically re-examine your life insurance needs, especially as you enter a new life stage. The policy you purchased when your kids were born may not be the policy you need during retirement. If you’re wondering how to structure your life insurance by age, or what policy you should be considering at this moment in your journey, here are some things to consider.

Life Insurance in Your 20s

At what age should you get life insurance? Though many people assume they don’t need life insurance, the answer to this question really is that you should start in your 20s. One of the biggest misconceptions about life insurance is that you don’t need it when you’re young — but that’s far from true.

You may want a life insurance policy if you’re married, have started a family, support family members or have private debt (from student loans, car loans, mortgages, and so on). In the event of your death, a life insurance policy can help shield your co-signers or joint account holders against your debts and be able to cover any costs associated. Consider purchasing enough life insurance to cover these debts in the event of your death. Funeral expenses are also a concern for young singles, and while it is typically not advisable to purchase a life insurance policy just for this purpose, it’s worth considering if you know that paying for your funeral would burden your parents or whomever would be responsible for funeral expenses. 

There’s another reason to consider getting life insurance in your 20s: life insurance policies are generally inexpensive for young adults. Buying life insurance when you’re young and healthy can ensure that you benefit from a lower premium – for the entire term of the policy. But you should also balance that consideration with the earnings you may realize by investing the money now, instead of spending it on insurance premiums. Farm Bureau’s network of insurance agents and wealth management advisors can help you find the right balance for your needs.

Life Insurance in Your 30s

By the time you reach your 30s, you may have experienced one or more significant life changes. Perhaps you’ve gotten married, started a family, landed a new job or bought a house. You may have more dependents and responsibilities to consider, and you’ll want to be sure your life insurance is keeping up.

If you’ve started a new position or a new career, life insurance may not seem like something that should be at the top of your list. But reconsidering your life insurance when your income changes is one of the smartest insurance moves you can make.

Furthermore, changes in your family situation should be a reminder to revisit your policy and adjust it accordingly. Your life insurance needs increase as children or other dependents join your family. Life insurance can cover funeral costs and, more importantly, provide income if you’re gone.

Keep in mind that single-income families are completely dependent on the income of the employed person. If he or she dies without life insurance, the consequences could be disastrous. Conversely, the death of the stay-at-home spouse would necessitate costly daycare and housekeeping expenses. Both spouses should carry enough life insurance to cover the lost income or the economic value of lost services that would result from their deaths.

Dual-income families need life insurance, too. If one spouse dies, it is unlikely that the surviving spouse will be able to keep up with the household expenses and pay for childcare with the remaining income. An insurance policy will help bridge the gap and provide for loved ones.

And it’s not just immediate needs that a life insurance policy can help cover. If one spouse dies without coverage, long-term savings goals like college and retirement may have to be put on the back burner. A life insurance policy can help keep family members on track to achieve the dreams the family has been working toward.  

Life Insurance in Your 40s

As your career advances, your income often increases, too. If your standard of living has increased accordingly, it’s time to revisit your life insurance coverage.

Perhaps you’ve decided to start your own business. If you’re thinking of leaving your job, it’s especially important to review your life insurance coverage. 

Many people have employer-sponsored group life coverage through their employer, but if you leave that job, the coverage will usually end. So, as you separate from the company, find out if you will be eligible for group coverage through your new employer, or look into purchasing life insurance coverage on your own. You may also have the option of converting your group coverage to an individual policy. This may cost significantly more, but it may be wise if you have a pre-existing medical condition that could prevent you from buying life insurance coverage elsewhere.

That said, not all life changes call for increasing your life insurance. If you’ve paid off debts — car loan, mortgage, private loans and so on — or your children have moved out, your life insurance coverage can likely be adjusted. 

Now may also be the time to shift from a term policy to a permanent life insurance policy now. There are additional benefits that can come with a permanent policy, such as the ability to build cash value that in time can be used for retirement income or the option to add riders that can help cover long-term care expenses.

Life Insurance After 50

As you approach retirement, your life insurance needs will change. Now’s a good time to consider a daily living rider. With one in place, you can receive a portion of your policy’s death benefit if you become chronically ill or are unable to perform two of six essential tasks of daily living — eating, toileting, transferring, bathing, dressing and/or continence.

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 life insurance coverage. That’s a decision to consider as you head into your golden years.

What Life Insurance Policy Do You Need Now?

Your insurance needs will change at different stages in your life. Our life insurance calculator can help you decide how much coverage you need. We offer three types of life insurance: term life, whole life and universal life. Check with your Farm Bureau agent to see which is right for you.