Factors for evaluating life insurance options and setting premium levels include age, gender, profession, personal health status and family history. Of course, the general rule of thumb is that life insurance will be less expensive for younger, healthier people since there is comparatively less risk for the insurer.

As the primary factor influencing life insurance rates, we’ll be focusing here on age and some considerations to keep in mind.

Why Buy Life Insurance?

Specifically, what can it help your beneficiaries pay for once you’re out of the picture?

Here are a few examples:

• Mortgage or housing payments they couldn’t make without your financial contribution
• Cosigned obligations like a student loan that your family would need to pay off
• Other debts and unpaid bills, current and to come
• Monetary cushion to avoid tapping into savings
• Expenses for childcare, tuition and extracurricular activities now and in the future, including college
• Financial legacy for your family
• Medical bills or final expenses

When to buy? Essentially, you’ll need life insurance when there are other people who are dependent on your income. That said, however, don’t forget that it’s generally cheaper for younger, healthier people. So it can make sense to lock in a favorable rate before these obligations start to occur.

How Does Age Matter?

According the Investopedia, premiums typically increase on average by about 8% to 10% for every year of age. However, it can be as low as 5% annually in your 40s and as high as 12% if you’re over 50.

Your 20s

Generally the most affordable period, since your health profile is likely to be very good. However, if you’re single with no dependents, it may be advisable to wait. But you can expect to pay more the longer you hold off.

Your 30s

Most likely the time to make a commitment since you may have started a family, own a house and at least one car, and have typical bills to pay. How much insurance to purchase? A guideline is 5 to 10 times your annual income.* Or even higher with a spouse and kids plus limited liquid assets to handle expenses as they arise. If you already have minimal coverage, this stage of life is a good time to consider upgrading to match your current situation.

Your 40s

This can be an important time for a reevaluation of your coverage. Perhaps an earlier term policy is about to expire. Hopefully, rates will still be favorable if your health is in good shape.

Your 50s

Now is when life insurance can start to get expensive, based on actuarial considerations. But that certainly doesn’t mean that it’s not worthwhile in terms of the benefits we’ve outlined above. Just be sure to carefully evaluate your needs balanced against potential costs.

Your 60s

You can still get life insurance in this age bracket, but the length of the term may be limited (typically no longer than 20 years). Again, it’s a matter of what you need to protect and whom you may need to provide for.

 * A word on employer-provided life insurance. It’s generally wise not to rely on this kind of coverage alone. It usually provides a payout of just one or two times your annual salary.

What to Buy?

That depends essentially on how much you think you need, how much you can qualify for, and how much you can afford. It’s a very important decision that an agent or broker can help you make based on your individual situation.

Options include term policies that are in effect for a limited period of time and for which the premium level stays the same but may start over with a new policy. With whole life policies, the premium rises each year but cash value is accrued that can be borrowed against or withdrawn. Factors like length of term and coverage details can be juggled to find the best solution.

Since circumstances change as we age, life insurance should be more than a one-time consideration. Have you recently gotten married? Are you starting to have children? Have you taken on additional debt? As your lifestyle and obligations change, make sure to revisit your life insurance.

KeenanDirect can help you make the right choices, now and as your needs evolve. Click here to learn more.