Do You Need Life Insurance & When Should You Get It?

You need life insurance if anyone depends on your income or if you have financial obligations others would inherit when you die. Life insurance replaces lost income, pays off debts and covers final expenses for your dependents.

You need life insurance if you:

• Have a spouse/partner, children or other dependents who rely on your income
• Have a mortgage, student loans, credit card debt or business loans
• Want to cover funeral costs and final expenses
• Have a stay-at-home spouse whose childcare or household work would need replacing
• Want to leave a larger inheritance or make charitable contributions

You don't need life insurance if you:

• Have no dependents or financial obligations that would burden others
• Have sufficient savings, assets and investments to cover your dependents future income needs and debts.
• Are financially independent in retirement with no dependents who rely on you financially

Quick Self-Assessment: Answer These 3 Questions

1. Would anyone struggle financially if you died tomorrow? If yes, you need coverage equal to at least 10 to 12 times your annual income.
2. Do you have debts that would transfer to loved ones? Mortgages, business loans and cosigned debts don't disappear.
3. Do you want to leave money for specific purposes? College funds, inheritance or charitable giving require permanent coverage with a cash value component.

If you answered yes to any question, you need life insurance. The amount and type depend on your specific financial situation and goals.

The best time to get life insurance is in your 20s or 30s when you're young and healthy. Premiums are lowest at this stage, and you'll lock in affordable rates for 10 to 30 years. Your personal and financial obligations determine when you should buy coverage. Major life events like getting married, having a child, buying a home or taking on debt signal you need protection.

Major life changes bring new financial responsibilities and are clear signals you should get life insurance.  You should get life insurance when:

Your ideal age to buy life insurance depends on your financial responsibilities, health, family needs and long-term goals. Starting earlier typically offers better rates, but here are recommendations for when to get life insurance by age range:

Getting life insurance in your 20s and 30s might seem early, but it's a smart financial move with the lowest premiums you'll ever see. 50% of millennials are planning to buy life insurance soon.

Why you should get life insurance as a young adult

• Lowest rates available: Insurers view young, healthy applicants as low-risk, which translates directly to affordable rates. These savings compound over a long period since you're locking in rates for 20 to 30 years.
• Protect your insurability: Starting early protects you if health issues develop later. Your current policy is locked at your original rate even if you're diagnosed with diabetes, heart disease or other conditions.
• No health exam: Many life insurers offer no medical exam policies at this age

Considerations at this age:

• Avoid overbuying if you're single with no dependents: You might only need enough for final expenses and debts. You can always increase coverage when you get married or have children.
• Balance with other goals: Life insurance costs could go toward paying off student loans or building an emergency fund if coverage needs are minimal.

Your 40s and 50s are the peak of financial responsibility in life and this a common time to buy or increase coverage. Many people at this age have mortgages, children approaching college and aging parents to consider.

Why you should get life insurance in your 40s and 50s

• Align with family needs: Coverage at this age protects dependents during their most expensive years. College tuition, wedding costs and supporting aging parents all create protection needs.
• Estate planning opportunities: A life insurance policy offers estate planning and wealth transfer benefits.
• Address specific financial gaps: If you've accumulated debt or have a business, coverage fills protection gaps that savings alone might not cover.

Considerations at this age:

• Higher premiums: Health issues become more common during this period, raising premium costs. A 45-year-old typically pays two times what a 25-year-old pays for identical coverage.
• Limited policy options: Some insurers restrict term lengths or coverage amounts for applicants over 50, narrowing your choices.
• Medical underwriting: Expect more thorough health screenings like blood tests.

Buying life insurance after 60 requires careful evaluation of your specific needs and goals. Coverage at this age typically focuses on final expenses and legacy planning, but often it doesn't make sense to buy.

When you want to get life insurance in your 60s:

• Cover final expenses: Life insurance can pay for funeral costs, medical bills and estate settlement expenses.
• Leave a financial legacy: Coverage lets you leave a specific inheritance amount to children, grandchildren or charitable organizations.
• Supplement retirement income: Permanent policies have value you can access during retirement for supplemental income or emergency expenses.

Considerations at this age:

• Much higher premiums: Premiums can be three to five times higher after age 60 compared with rates at 40.
• Question the need: If you've accumulated sufficient assets, paid off debts and have financially independent children, coverage is unnecessary.

Waiting to buy life insurance increases premium costs  Here's what delaying coverage means for your wallet.

Scenario 1: A 25-year-old non-smoking male buys a 20-year term policy with a $500,000 death benefit, paying $28 monthly. The total cost over the 20-year term is $6,720.

Scenario 2: The same person waits until age 35 to buy an identical policy. At this age, the policy costs $44 per month, totaling $10,560 over 20 years.

The person who bought insurance at 35 paid $3,840 more for the same coverage amount and term length. While the 35-year-old's coverage extends through a statistically higher-risk age range (35 to 55 versus 25 to 45), the cost difference illustrates how much getting life insurance earlier saves.

Health changes raise costs even more. If you develop diabetes, high blood pressure, heart disease or cancer between ages 25 and 35, your premiums could double or triple beyond the age-related increase. Some conditions might make you uninsurable at any price.

90% or more of buyers should get term life. Term life insurance covers a specified period, typically 10, 20 or 30 years. Get term coverage when you need financial protection for a specific timeframe.

You should get term life insurance when you:

• Need to cover a mortgage that will be paid off in 15 to 30 years
• Have young children who will become financially independent within 20 to 30 years
• Want affordable coverage to replace income during your working years
• Need temporary protection while building savings and investments

Permanent life insurance provides lifelong coverage and includes a cash value component that typically underperforms other assets classes.

You should get permanent life insurance when you:

• Want to leave a guaranteed inheritance regardless of when you die
• Need coverage for estate taxes that will exist throughout your life
• Have a special needs dependent who will need financial support after you're gone

Permanent policies cost three to 10 times more than term coverage. A 30-year-old might pay $300 to $500 per month for a $500,000 whole life policy compared with $40 for term.

Once you've determined when you should get life insurance, here are the next steps:

Start by:

• Using our life insurance calculator to determine how much life insurance you need.
• Comparing life insurance quotes to see rates from top insurers based on your age and health
• Reading reviews of the best life insurance companies to understand customer service and claims processing. Research the cheapest life insurance policies.

Most healthy applicants can complete the application process online in 15 to 30 minutes. Some insurers offer instant approval without medical exams for certain coverage amounts.

We answer common questions to help you figure out if you need life insurance and when to get it: