If you're like most people, you know you'll probably purchase life insurance — someday. But "someday" can often come too late. Even if you think you're too young to need it, the best time to get life insurance may be today. Whether you're in your 20s or your 60s, here's the case for getting covered.
In Your 20s: Protecting Your Parents
If you're in your 20s, you may have at least a little debt, and perhaps even a lot. "In your 20s you're likely coming out of college with student loan debt, and you might have other debt — such as credit cards, car payments, etc. — because you're trying to get your life started," says Gena Wolbrecht, Senior Vice President and Platform Investments Executive for Regions Investment Services.
If you die, and another person or persons are guarantors, co-borrowers, or authorized users on any loans or credit accounts you have, these people will probably be responsible for repaying that debt (student loan debt will likely be dissolved if your loans are public but not if they're private). If your parents are these people, this can create an absolute nightmare for them right when they are saving for their retirement. If you're married, it could be your spouse who is affected. If your spouse is young, too, he or she is likely just starting his or her career and has little income to spare.
"Regardless of your age, you're going to have debts that you don't want to leave your loved ones," Wolbrecht says. "And even if you don't, there are burial and funeral expenses, which are probably going to cost more than $5,000."
You'll want to make sure you have a complete understanding of what your total debt obligations are and whether any of these obligations will survive your death. Then, you'll want to determine whether your estate and/or other people will be expected to pay them. This will give you a good starting point for determining whether you should consider life insurance and how much will be needed to cover these obligations.
Also take into consideration that a life insurance plan will probably cost less if you start it when you're young and healthy.
In Your 30s: Securing Your Family's Future
Many people start families in their 30s. If you're among them, it's not just you anymore. Now you have a spouse and perhaps children who depend on you for support. Losing you would mean losing your income and everything it helps pay for, including a home and child care. As income replacement, life insurance can help ensure your spouse and kids maintain their current standard of living.
But getting life insurance isn't just about today. It's also about tomorrow. "People in their 30s typically are planning for the future," Wolbrecht says. "If you're a parent, for instance, you want to make sure your children are able to attend college someday."
In Your 40s: Raising the Stakes
"In your 40s you have the same concerns as people in their 20s and 30s — just more of them," Wolbrecht says. You probably have a bigger house, for instance, which has a bigger mortgage; a nicer car, which has a larger car payment; bigger kids, who are even closer to college; and a bigger salary, which would be harder for your family to replace.
People in their 40s also are statistically more likely to be divorced, which could have additional financial implications in the form of alimony, child support, or assistance for your children's future guardians.
In Your 50s: Preparing for Retirement
In your 50s, you may have college-aged children to support. As you begin thinking more seriously about retirement, however, you and your spouse may be increasingly concerned with providing for yourselves, as well. Life insurance will help your spouse to continue on with the retirement plans you've prepared together — with or without you.
Another concern is aging parents. "Taking care of older parents is important for a lot of people, especially if you're helping pay for assisted living or health care," Wolbrecht says.
In Your 60s and Beyond: Leaving a Legacy
For retirees, life's final chapter is often about the legacy they'll leave behind. Without life insurance, that legacy can be marred by unplanned expenses or debt obligations for family members. For instance, grown children or a surviving spouse can be burdened with burial and funeral expenses.
Even if debt isn't a concern, you can leverage single-premium life insurance for the purpose of wealth transfer. Discuss this objective with your CPA and estate planning team as part of an overall plan that is aimed at ensuring a tax-free inheritance for your heirs. "You can use life insurance to pass on money to a loved one, a church, or even a charity," Wolbrecht says.
In the end, life insurance isn't about you. It's about the people you love. So whether you're 23 or 73, getting life insurance now — while you're still here — may be the best way to care for them later.
