Planning for your family’s future starts with choosing your finances wisely, and life insurance is one of the more important components of that process. Your needs for insurance will not be the same at every point in your life cycle, as they will likely change with your increasing responsibilities and changing financial goals.
Whether you are in your mid-20s and just starting in your career, in your mid-30s and raising a family, or even if you are in your 50s and planning for retirement, it is important to select the life insurance plan that best suits your stage of life. In this blog, we will discuss the ways in which insurance needs change as we age and how to adapt to those changes by avoiding common mistakes that arise from changing priorities.
Life Insurance in Early Adulthood (20s to 30s)
In your 20s and early 30s, you probably feel invincible, and this is when you should buy life insurance. Why? Because you will get lower premiums while you are young and healthy.
Even as a young adult without dependents, it is a good time to start developing a financial discipline. Options like term insurance plans, ULIPs, or endowment policies can help protect your long-term goals of saving for a home or developing a retirement corpus.
How Much Coverage Should You Purchase?
Look to have at least 10 times your salary, as well as any student loans or personal debt that exists. This coverage allows your family to remain liquid if something occurs outside of their control.
Life Insurance in Middle Adulthood (30s to 40s)
This stage of life often has the largest financial burden. You may be married, have children, or have a mortgage; you have reached the peak of your financial responsibilities.
It’s imperative that you have full life insurance coverage. You are not only covering yourself anymore; you are covering your spouse, your children’s education, and your older parents, if you have them.
How Much Coverage Should You Purchase?
Purchase life coverage of 15 times your salary, in addition to any debt remaining. To ensure you are protecting milestones in the future, you can couple a term plan with either a child education plan or a pension.
Life Insurance In Mature Adulthood (40s to 50s)
Your children may be heading towards college, and you are most likely looking towards retirement. Now, you should revisit your current policies and adjust coverage to meet your new financial goals and realities.
Key Considerations:
If you haven’t already, it’s certainly not too late to buy a term insurance policy.
You should start thinking of a retirement-focused plan (like an annuity or pension plan).
You want to protect your family’s lifestyle in the event that something happens to you.
How Much Coverage Should You Purchase?
Life insurance coverage should cover approximately 15 – 20 times your current income to ensure the basic life costs, such as college fees, marriage, etc., are taken care of.
Conclusion
Life insurance is not a one-size-fits-all product. Your life circumstances change over time, and therefore, so should your coverage. From protecting future aspirations in your 20s to family protection in your 30s, retirement planning in your 40s, and wealth preservation in your 50s, there is life insurance at every stage.
Please ensure you select the right coverage for where you are in life. Don’t wait too long to buy! Don’t underinsure! And most importantly, keep your family informed.
Also Read: Insurance as Investment: Rethink Financial Protection
