Best Life Insurance According to Age

By Compuquotes Team on March 26th, 2008

Your life insurance needs change as you move through life, based on different circumstances and situations. Every persons needs are different, so the following should be used as a guide only. It is best to seek financial advice before taking out any life insurance policy, to ensure that you are adequately covered.

There are two main types of life insurance that most insurance companies deal with. The first is Permanent Life Insurance. This type of policy runs from when you take it out, until the time of your death. The premiums for this type of insurance remain the same for the life of the policy, and are determined by factors such as your age at the time of taking out the policy, your job and it's associated risks, along with any health conditions you may have.

Term Life Insurance is a policy which is taken out for a set period of time. Most insurance companies offer 5, 10, 20 and 30 year term insurance policies. This type of insurance is most often used when taking out a large loan, say a mortgage, so that you are covered for the period of the loan. Many people also use this type of policy during the initial child rearing years.

So, what is the best insurance for you?

Scenario 1 - Single or Partnered, Early 20's, No Debt

At this point, in most cases, you won't need any life insurance. In the event of your death, there won't be any debt falling onto your loved ones, and you don't have any dependents that will need to be cared for.

NOTE: If you do have a partner, but you are the sole income earner, you may want to consider taking out life insurance. Are you the sole income earner because your partner is still studying? Then a term insurance policy covering the remaining time your partner plans to study may be beneficial.

Scenario 2 - Single or Partnered, Early to Late 20's, With Children and/or Debt

As soon as you have a child, or take on a large loan, such as insurance, it is crucial that you take out life insurance. Though no one wants to think about the possibility of dying early and leaving their young children behind, life is not predictable. A term insurance policy covering the life of the loan or a 20 year period will help to provide education and basic necessities for your child in the event of your death as well as remove any debt.

NOTE: If you are planning on having several children over an extended period, you may want to consider a permanent life insurance policy instead, as most term insurance policies can only be taken out for a maximum of 30 years.

Scenario 4 - Single or Partnered, Early 40's to Late 50's, With Children and/or Debt

At this stage, if you have no debt, you may want to consider a small permanent life insurance policy, which would cover any legal, funeral and emergency situations in the event of your death. Depending on the ages of your children, you could also include an amount to cover their remaining education expenses. If you do have a large debt, a term insurance policy covering the loan time, along with a small permanent life insurance policy would be beneficial.

Scenario 5 - Retired, No Debt

A small permanent life insurance policy would be useful at this stage, with an amount covering immediate expenses, such as legal costs, funeral arrangements and emergency situations. You may also want to include a certain amount of money to your beneficiary for a set period after your death.

Of course, not everyone's life fits neatly into the categories described. It is important that you understand exactly what the financial needs of your family would be if you were to die unexpectedly. Talking to a financial advisor or planner can help to make sure that you are adequately covered, providing peace of mind for you and your family.

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