Life Insurance Needs By Age Group

What type of life insurance is best for each age group?

Life insurance policies are not one size fits all. Depending on age, health, and financial status different products and amounts of coverage may be recommended – A.L. Johnson

In this article we will breakdown what policy types are available based on age and how these can work along with your overall estate planning. We will breakdown life insurance needs by age group. This information will allow you to take a look at your own coverages to ensure you are in a good position so you can have peace of mind.

Let’s start with…

Life Insurance For Kids (0-17)

We never want to think of something bad happening to one of our children especially while they are young. The fact of the matter is that we never know what the future may hold and it is always best to be prepared for the unexpected.

Purchasing life insurance for children under 18 is important for 2 key reasons.

• Pricing– Life insurance premiums are calculated based on your age and health. The younger and healthier you are the more affordable your coverage will be. 
• Qualifying– Generally speaking, most children have not had any life events such as adverse health conditions or legal trouble that would disqualify them from being insured so it’s easy to get them coverage.

What types of life insurance are available for children?

There are two ways that you can cover your children with life insurance.

Rider – As a rider your children would be covered on your life insurance policy. A rider acts as term (temporary) life insurance. Most companies will provide coverage for your child to either age 21 or 25. At whatever age coverage through the rider ends they would need to get a new policy to remain protected and the price would be based on their age at that time.

Permanent coverage – A permanent policy for children will generally come in the form of whole life. This means that the policy never expires due to age. The price on these policies is locked in for life so even at 80 years old they would still have the same low premium.

Permanent whole life insurance also builds a cash value that can be borrowed from if needed an it also builds equity in the form of paid up life. If one decides in the future to no longer pay premiums on the policy the company will reduce the death benefit and the policy will be considered “paid up” meaning no more premiums would be due.

How Much Coverage Do Children Need?

It is recommended that you provide children with at least $10,000 to $15,000 in coverage to take care of funeral expenses. It is also wise to consider purchasing coverage above that amount to lock in a low rate for their future needs.

You may also want to purchase additional insurance so if something happens you can have enough money to take additional time off from work. Many companies only offer 3-10 days for bereavement. Your child’s life insurance proceeds can buy you more time to grieve and not have to rush back to work.

For more information on life insurance for kids or a free quote CLICK HERE

Now let’s talk about…

Life Insurance for Adults (18-55)

Adults have many considerations when it comes to purchasing life insurance protection. At this stage of life not only is one concerned about funeral expenses but, income replacement and asset protection become two major areas of focus.

During these years we start a family, create businesses, purchase homes, and more. This is where we have our peak amount of responsibility and people depending on our income. Life insurance for this age group is of the utmost importance.

What type of life insurance do adults need?

This is a widely debated topic. There are pundits who believe you should only buy term life insurance while others feel that permanent whole life insurance is the only way. It is our recommendation that people in this age group consider both temporary and permanent coverage.

Since term life insurance offers the most affordable cost per thousand of any type of life insurance coverage this is the place one should start. It is recommended that during the years of peak responsibility we have coverage equal to at least 10 times your annual salary plus mortgage and other debts. This will ensure your family can keep their home, pay off debt and will have an adequate amount of time to adjust to the loss of your income.

When a policy is purchased solely for the purpose of income replacement or debt it is ok for the policy to be temporary (term) because the need you are covering is temporary and will eventually go away.

Why do adults still need permanent coverage if they have term insurance?

At first glance one may assume that if they have a sufficient amount of term life insurance there’s no reason to consider permanent coverage but, this is incorrect.

Speak to 20 senior aged people about their life insurance and you will quickly find that many of them carried term life insurance in their younger years or solely relied on life insurance through their job. Many of these people find themselves in a less than desired position.

Here’s why…

• They still need coverage – Many people find they still have debts and responsibilities after their term (temporary) life insurance has expired.
• They can’t afford the new premium amount – Since life insurance is based on your age when you take out the policy many people find that the price is so dramatically different after their term expires that they can’t afford much coverage due to being much older.
• They no longer qualify – As we age our health can begin to fail. Many people end up being uninsurable so after their term runs out they no longer qualify for coverage. People with serious medical conditions also tend to run through their savings and investments keeping up with healthcare expenses so there’s little to nothing left behind for their family.
• They want to leave an inheritance – We don’t know when our time will come but, if we pass away at an older age after our term life insurance has expired we may not be able to leave the inheritance for our loved ones that we desire. Don’t forget that life insurance benefits are passed on to our family TAX FREE.

For these reasons it is advisable to maintain any permanent policies that were purchased by your parents when you were a child. You may also consider purchasing additional permanent life insurance in the form of whole life or universal life while you are young and the premiums are still affordable.

By maintaining both temporary and permanent life insurance all of your bases are covered. If you pass away young both policies will pay out. If you pass away in your golden years and your term policy has expired your family will still receive a payout from your permanent coverage.

For more information on life insurance for adults and a free quote CLICK HERE

Let’s take a look at…

Life Insurance for Seniors (55 and over)

In our golden years it is still advisable in most cases to still have some form of life insurance. At this point in life we are considering retirement and have hopefully paid off the majority of our debts. Our children are most likely grown and self sufficient.

At first glance it would appear that seniors no longer need life insurance but, for many that just isn’t the case.

There are 3 main reasons that seniors still need life insurance

• Funeral expenses – Average funeral costs range between $10,000 and $15,000 dollars. Life insurance can ease the financial burden your family would have to endure to provide a proper funeral.
• Inheritance – Many people have a desire to leave something behind for their family or favorite charity no matter how old they are when they pass away.
• Estate taxes – Depending on what property and assets you leave your loved ones they may encounter tax liability. Your life insurance policy can help cover those costs and restore your estate to it’s full value.

What type of life insurance should seniors buy?

For most purposes seniors are better served by purchasing permanent life insurance. Term policies are generally limited past the age of 55. Also because we don’t know exactly how long we will live permanent coverage is the only way to guarantee our wishes can be funded and carried out at any age. 

Imagine paying on temporary (term) coverage for most of your life only to pass away at 80+ years old and there is no protection in place to cover a funeral or leave an inheritance. This happens to many people.

Because term life insurance offers high amounts of coverage for such low premiums they are generally harder to qualify for and many seniors find themselves in a position where permanent coverage is all they qualify for because companies are more lenient with what medical conditions they will accept under permanent life insurance plans.

If you still decide to go with term life insurance as a senior make sure that the policy offers a conversion privilege. This policy feature allows you to convert your term policy into a permanent policy without having to requalify. This protects you if your health declines during the years your term policy is in force. You can convert your policy and keep it for the rest of your life.

For more information on life insurance for seniors or for a free quote. CLICK HERE

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