Life insurance can be confusing—no matter how old you are.
Do I need a policy? How much cover should I get? Does my policy still work for me and my family? Would funeral insurance be a better option? These are just some of the questions people ask themselves at different stages of life.
You’ll likely find that your life insurance needs change as you get older. Knowing what decisions to make—and when—ultimately depends on your individual needs and financial situation, but there are some common considerations that people tend to make as they reach milestone birthdays.
Life insurance moves by decade
In your 20s
It’s easy for people in their 20s to write off the need for life insurance. Many believe it’s something for “old people”, like their parents or grandparents. However, this might not be the case. Debts like car payments, student loans, and credit cards pass to your next of kin when you pass away. Life insurance could help your parents or other family members pay these off without needing to dip into their own savings.
Another reason to consider life insurance in your 20s? It’s often easier to purchase it when you’re young than it is later in life. Health is a big factor in determining whether you can be covered and how much you’ll pay. Since younger adults tend to be fit and healthy, they may find it easier to take out a policy with few or no health exclusions. They’re also likely to be offered lower, more affordable premiums.
Finally, life insurance can cover more than just an unexpected death. Many policies will pay their benefit early if you’re diagnosed with a terminal illness. That way, you could use the money to cover medical expenses or in-home care without placing your family in debt.
In your 30s and 40s
As your life changes, your insurance needs may also change. By the time you’ve hit your 30s, you may have several big life events under your belt—getting married, buying a house, or having kids. Take a moment to check your life insurance policy and evaluate if it still meets your needs.
Consider covering your partner, especially if you rely on two incomes to pay the bills. However, covering a stay-at-home parent may also make sense. ‘Services’ provided by your partner, including childcare and housekeeping, can be expensive. Life insurance could help cover the costs of hiring professional help in the event of their death.
Also, check if the policy’s cover fits your current financial needs. You may want to increase the benefit amount to provide enough money to pay off the mortgage, car loan, or other debts. You may also have new expenses, like private school fees, that life insurance could help with should you pass away suddenly.
Lastly, you may want to think about adding your children as beneficiaries to any policies you and your partner hold.
In your 50s and 60s
Reaching your 50s brings more life changes and the need to check your life insurance cover. Approaching retirement age may mean scaling back expenses. If you’ve paid off your debts (house, car, other loans), then lowering your cover and premiums may make sense.
However, you may also decide to keep your cover where it is or even increase it. Some people use life insurance policies to supplement their estate. This may be helpful in blended family situations, where children and step-children are in the mix. In fact, you might want to double check the beneficiaries on your policy and add or remove any names that may have been overlooked before.
65 and beyond
By now you’re hopefully relaxing, spending time with family and friends and enjoying your golden years. Take a short break from the fun to check the beneficiaries on your policies. You may want to add your grandchildren to the list.
If you’ve gone this long without getting life insurance, you may want to consider getting some sort of policy to help cover the cost of a funeral. We understand that it can be difficult to think about your own passing, but unfortunately it is a fact of life—one that’s potentially very expensive.
A funeral insurance policy may be a good option at this stage of life. Funeral insurance benefits are typically paid quickly, often within 48 hours of the claim being accepted. This can provide your loved ones with a lump sum to cover funeral arrangements or settle other final expenses. If you do have life insurance, check your policy. Many offer a smaller advance payment to help cover funeral costs whilst a claim is being reviewed.
Here’s to another year!
No matter your age, making the right life insurance decisions could be important to your family’s financial future. Set aside some time every year or two to review your policy. It may not be the most fun way to spend an afternoon, but it could make a big difference in helping your loved ones carry on after you’re gone.
Request a free, no obligation life insurance quote from Momentum Life!
A version of this article was first published on 6 July 2017. It has been updated to reflect current Momentum Life products.
Disclaimer: The information provided in this article is of general nature, and does not take into account your personal situation. You should consider whether the information is appropriate to your needs or seek professional advice, where necessary.
All product information is correct at the time this article was published. For current product information, please visit the Momentum Life website.