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 can also often be easier to purchase 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 premiums than older people.
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.
In your 30s and 40s
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. So you may have expenses like a mortgage, car loan, or other debts to pay off. You may also have new expenses, like private school fees.
It is possible to cover your partner too, especially if you rely on two incomes to pay the bills. Covering a stay-at-home parent is also possible. ‘Services’ provided by your partner, including childcare and housekeeping, can be expensive. You may also 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. Approaching retirement age may mean scaling back expenses i.e. you may have paid off your debts (house, car, other loans). Some people use life insurance policies to supplement their estate however, so 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.
Here’s to another year!
No matter your age, you may want to 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 the future.
A version of this article was first published on 6 July 2017. It has been updated to reflect current Momentum Life products.
About Author: Momentum Life is a leading provider of Life insurance and Funeral insurance in New Zealand.
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The content provided in this article is for information purposes only. The information is of a general nature and does not constitute financial advice or other professional advice. To the extent that any of the content constitutes financial advice, it is limited to Momentum Life products only and does not consider your specific financial needs or goals. You should consider whether the information is appropriate for you and seek independent professional advice, if required.
All product information is correct at the time this article was published. For current product information, please visit the Momentum Life website.
