How Long Should I Have Life Insurance? (2024)

FAQs

How Long Should I Have Life Insurance? ›

A life insurance policy should last at least as many years as you plan to spend paying off your mortgage or credit card debt. This can protect your loved ones from being responsible for your debts if something happens to you.

Many people in their 60s and 70s may no longer need life insurance. They may have already paid off the house, stopped working, sent the kids off to care for themselves or accumulated enough assets to offset the need for life insurance. But sometimes buying or maintaining a life insurance policy over age 60 makes sense.

20-year term life insurance is the most popular term length and can help cover the income of new parents or newlyweds as their family grows. 30-year term life insurance can help cover large, long-term financial obligations, such as a mortgage or college debt.

Most people aim to do this over their mortgage period of 25 years. This is to ensure that if a death occurs, any debts or payments will be covered in this time. This policy is also ideal if you have children still living at home or in full-time education.

Life insurance may not be worth if you have no dependents, if you have a tight budget, or if you have other plans for providing for them after your death.

The bottom line

Life insurance is a smart idea for most seniors. That's especially the case if you have a spouse, lack plans to cover end-of-life costs or don't have a long-term care insurance policy.

Human Life Value*

Based on the value of your future earnings, a simple way to estimate this is to consider 30X your income between the ages of 18 and 40; 20X income for age 41-50; 15X income for age 51-60; and 10X income for age 61-65. After age 65, coverage is based on net worth instead of income.

A life insurance policy should last at least as many years as you plan to spend paying off your mortgage or credit card debt. This can protect your loved ones from being responsible for your debts if something happens to you.

Another reason companies are able keep term life premiums lower is that premiums are almost never refunded. This is normally the case even if you cancel your policy. So in most cases you shouldn't expect any money back after your term expires.

If you only need coverage for a few years while your children are growing up, for example, then term life insurance may be the right choice. But if you want lifetime coverage and the ability to build cash value, then consider whole life insurance.

What is a good amount for life insurance? ›

Most insurance companies say a reasonable amount for life insurance is at least 10 times the amount of annual salary. If you multiply an annual salary of $50,000 by 10, for instance, you'd opt for $500,000 in coverage.

Is it too late to take out life insurance? In short, no it's not too late. As mentioned earlier, most providers will let you take out certain policies until around 80 years old and sometimes even up to age 90. It just means that your premium cost may be higher due to your age.

Life insurance for young people is a particularly good idea if you have dependents who rely on your income, you have a lot of debt, or you want to lock in lower premiums while you're young and generally healthy. If you are younger when you buy your policy, you may qualify for lower premiums.

Life insurance is no longer needed for many people once they reach their 60s or 70s. At this point they retire, their kids have grown up, and they've paid off their mortgage and other debts.

If your family can afford daily expenses, pay their bills, and retire in comfort without the use of life insurance funds, you may want to consider canceling your policy.

One disadvantage of life insurance is that the older you are, the more you'll pay for a policy. This is because you're more likely to pass away during the policy period than a younger policyholder and will, in turn, cost the life insurance company more money.

Once you're in your 70s, there may be more limitations on the types of policies available to you. but you can still get life insurance over 70.

There are several reasons why you may benefit from a life insurance policy as a senior. The death benefit can provide financial security for beneficiaries and help them cover a variety of expenses, such as burial costs, medical bills, and remaining debts, like a mortgage, credit card bills, and auto loan payments.

Most insurance companies will not sell new life insurance policies to people over a certain age, with the cutoff typically between ages 70 and 80. For people who are older or suffer from pre-existing health conditions, a guaranteed life insurance policy may be the best or only option.

Buying life insurance at age 50 could be essential to protecting your loved ones financially. A 20-year term policy could bridge the gap between age 50 and retirement. You might pay more for insurance as a 50-year-old applicant, but it may be worth it for the peace of mind.