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If there’s one thing you can expect in life, it’s the unexpected. Just like your life looks much differently when you're in your twenties versus your eighties or if you have a family or are single, your life insurance plan for each stage of your life may look differently too.
If you’ve asked yourself, “Why would I need life insurance in my twenties?” or “How will life insurance help me if I have a family?” this blog can help you answer those questions. Read on to see how life insurance can help you in each life stage!
If you’re in your 20s...
For many, twenties are a time of furthering your education or gaining important training so that you can make a better living. College, trade school, and even higher education is a great investment in your future, but is also a time in which it is common to begin accumulating debt.
Debt and student loan debt
Student loans are different from traditional debt, in that they are not necessarily transferred to your spouse (or even your parents if you are single!) if you die. It depends on the kind of student loan you have, too. Stipulations in federally backed education loans say that if a student loan borrower dies before the debt is repaid, the debt is canceled and, therefore, doesn’t need to be repaid.
However, private student loans are different. There are a few private lenders that offer death and disability forgiveness policies, but that is definitely not the norm. It’s a good idea to check your student loan terms before investing in a life insurance policy in your twenties to know how much protection you’ll need if you are incurring a significant amount of student loan debt.
In addition to student loan debt, any credit card debt accumulated (from rent, furniture, and other needs) during this time would need to be paid out. The average credit card balance among consumers in their 20s was $2,709.
GOALS: Pay off any debts behind like student loans, car payments, or other debts, so you don’t leave them behind for your loved ones.
If you’re a homeowner...
Because mortgages are repaid over such a long period of time, it’s likely you could still be paying off a mortgage when looking for the right life insurance policy. If you are a homeowner, make sure the policy you choose will help those you leave behind to afford your home — and all the other related expenses that come with it.
GOALS: Pay off your mortgage and provide both shelter and income for any dependents.
If you’re married...
In addition to grief, your spouse will also get the primary responsibility of maintaining your finances. The right life insurance policy will leave your partner better prepared to stay afloat financially, lessen the overwhelming impact, and have the reassurance they are able to make ends meet.
GOALS: Replace income, pay your share of debts or settlements, and leave more for the one you love.
If you have a family...
If you have a family, your life insurance needs are more expansive, as you’ll want to provide for the family home, debt, other loans, college savings, and retirement. Don’t worry, though. Life insurance policies are designed to take care of multiple financial responsibilities.
GOALS: Provide for your children’s education costs, pay off loans, and leave a nest egg behind.
If you own a business...
Owning a business is a wonderful accomplishment that you can pass on to your spouse and children, if they choose to follow in your footsteps. Or, if you have a business partner, a term life policy is a great way to cover buyout costs or other related expenses.
GOALS: Help facilitate a partner buyout and/or cover any outstanding debts or expenses.
We hope this helps you better understand your life insurance needs through each stage of life. Life insurance can be a complicated (and daunting) subject, but with the right planning, you can find a plan that works for you and protect your loved ones.