Life insurance is an important tool for planning for your financial future. The reality is there are many reasons over a person’s lifetime why they may need life insurance. Looking at the chart we see that Seniors have the highest ownership of life insurance.

The most common reasons for having life insurance are to pay off debts like mortgages and to help family members achieve financial goals like retirement or going to college. This article will illustrate the different types of insurance coverage available, help you determine how much life insurance coverage you may need, and how your age plays a pivotal role in the type of life insurance coverage to get.

How to know if you need life insurance

Life insurance is just like any other insurance product. It is designed to protect loved ones in case of a catastrophic event which in this case is death. To see if there is a need for any type of insurance, the conversation should always start with the two following questions:

The types of life insurance and how your life stage impacts what is best for you

There are two main types of life insurance. Term life insurance is like renting a house. It’s cheaper but only lasts for a set amount of time, like 10 or 20 years. Younger seniors (60-70 years old) might still be paying off a house or helping out their kids financially. In this case, term life insurance could be the best choice. It’s cheaper and gives you coverage while you still have those responsibilities.

Permanent life insurance (e.g., universal life or whole life) is like buying a house. It costs more, but it sticks around forever and can even build up money you can borrow later. Older seniors (70 and up) might not have as many bills, but they may want insurance to cover funeral expenses or leave an inheritance. Here, permanent life insurance can be a better fit, since it lasts as long as you do (and, let’s be honest, we don’t always know how long that will be!).

Below is a chart that summarizes the characteristics of Term and Permanent policies:

What factors should you consider when purchasing life insurance?

• Overall Cost: For most, this is the most important consideration. The cost of insurance is determined by your sex (males die sooner so they are more expensive), your age, and your overall health. 
• Your health: Insurance companies like to know how healthy you are. If you’re in good shape (you still walk faster than your grandkids), you might get cheaper rates. If not, there may be policies where you don’t need a health check, but they will cost more.
• Company reputation: Make sure the insurance company you choose has a good reputation, so they’re still around when your family needs the money. You don’t want to end up with a company that disappears like that one sock in the dryer.
• Extra benefits: Some policies offer cool extras, like the ability to use part of the money for medical care if you get sick. Like many other things in life, these are nice to have but cost more money and are typically not required!

In the end, picking the right life insurance policy is like picking a pair of shoes. It has to fit your needs, your budget, and provide comfort. That way, you can focus on enjoying life, knowing your loved ones will be taken care of when the time comes.

Sources:

1. https://www.moneygeek.com/insurance/life/analysis/life-insurance-statistics/

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