Life insurance can be confusing. Deciding when to take out a policy and for what amount can be daunting. Even if you already have a policy, you may discover that it no longer fits your needs because of big life changes.
In order to demystify life insurance just a bit, here are some considerations to make as you go through life:
In your 20s
Life insurance is probably the last thing on your mind when you’re young. But taking out a policy in your 20s is often easier than purchasing later in life. Health is a big factor in determining whether you can be covered and calculating your premiums. Purchasing a life insurance policy when you’re young and healthy may save you money in the long run.
Active young adults may want to consider policies that also offer accident insurance. This optional extra often includes accidental serious injury cover. Should you be seriously injured in an accident, a benefit is paid that can be used to help with ongoing medical care or household bills whilst you’re unable to work.
In your 30s and 40s
As your life changes, your insurance needs will 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 can help cover these costs 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.
Lastly, you may want to consider adding your children as beneficiaries to all policies you and your partner hold.
In your 50s and 60s
Reaching your 50s brings more life changes and the need to re-evaluate 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 coverage 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.
65 and beyond
By now you’re likely 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 grandchildren to the list, or consider nominating a charity you’re passionate about.
We understand that it can be difficult to think about your own passing, but unfortunately it is a fact of life. A funeral insurance policy may be a good addition to your financial plan. Funeral insurance benefits are typically paid sooner than life insurance benefits—often within 48 hours of claiming. This can provide your loved ones with a lump sum to cover funeral arrangements or settle other final expenses.
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 article's original publishing date. For current product information, please visit the Momentum Life website.