When you are in your 30s, it can be a great time to buy life insurance. You’re at an age where, if you’re in good health, you’re likely to be able to get affordable coverage with a term life insurance policy. And you’re probably at a point in your life where others depend on you financially and would need a way to replace your income if you were no longer there.
Those are just a few of the reasons that buying life insurance in your 30s is often one of the most practical, impactful and affordable times to secure coverage. (Plus, it’s not a coincidence that the average Haven Life customer is in his or her mid-30s.)
Here are eight smart reasons to buy life insurance in your 30s, as well as tips for what kind of insurance and how much coverage you might need. Trust us: Your 40-year-old self will thank you for not putting off this important purchase.
1. You have a family now
In your 30s, you might find yourself buying a house, getting married, or starting a family. You have plenty of financial responsibilities, and you likely have people who depend on you financially. If you were to pass away, your loved ones might not be able to pay the bills without your income.
However, you can financially protect your family from your death if you have life insurance. When you buy a policy, you enter into a contract with a life insurance company. You pay a monthly or annual premium to the company in return for a payout to your beneficiaries (the “death benefit”) if you die while your contract is in place.
The proceeds from a life insurance policy can be used by those persons you name as your beneficiary(ies), who may be your partner, kids, designated guardians or even your parents – to help pay for a variety of expenses, including the following:
- Mortgage or rent
- Child care costs
- Utilities, transportation and other regular expenses
- Medical bills
- Other insurance policy premiums
Think of your policy as a lifeline for your loved ones. Without it, your family likely would struggle financially. A survey by nonprofit organization Life Happens found that 4 in 10 households without life insurance would have trouble paying living expenses if their primary wage earner died.
You also can think of life insurance as a very important first gift to your child. You likely have hopes and dreams for your children that cost money to make happen. Buying a policy now helps ensure that your family has money to continue affording those plans. Knowing that your child is protected and will have a life insurance policy payout to put toward things like taking dance classes, going to camp or attending college, even if you were no longer here, is one way to begin leaving a legacy for your child.
2. You make more money now
Chances are, you’re making more money in your 30s than you were in your 20s. Your higher income would be difficult to replace if something were to happen to you.
However, a life insurance policy could help replace some of your lost income. Experts often recommend that you buy coverage with a death benefit that is equal to five to 10 times your annual salary. Remember that pay disparities among women and men can lead to a life insurance gender gap, so this rule of thumb doesn’t always stack up.
To find out how much coverage you need, use an online life insurance calculator for a personalized recommendation.
3. You might owe money, too
By the time you’re in your 30s, you likely have debt – mortgage debt, student loan debt and consumer debt. When you die, that debt might not die with you. It depends on the type of debt and whether there is a cosigner on the loan.
For example, if you and your partner or spouse took borrowed money together to buy your home, your partner will have to continue paying the mortgage after you die if he or she stays in the house. Student loan debt can be trickier.
A Haven Life survey of student loan borrowers found that 73% of respondents didn’t know what would happen to their student loans when they died. Fortunately, federal student loans are discharged when you die. But with private student loans, it depends on the lender’s policy. Plus, if you have a cosigner on a private loan, that person will have to continue making payments.
If you have any debt with cosigners, such as student loans, it’s important to consider buying a life insurance policy that can help them pay off those loans. It’s also essential to think about all the other things that your loved ones may be on the hook for if you were to die.
4. You could save money by getting life insurance now
The financial protection you can provide for your loved ones makes life insurance worth the cost. Fortunately, the cost of life insurance can be quite affordable if you buy a policy in your 30s.
The rate you pay for insurance is determined by several factors, including your age. Considering that, it’s probably no surprise that you can lock in a lower insurance premium by getting coverage when you’re young and healthy.
For example, a 30-year-old woman in excellent health can purchase a 30-year term life insurance policy with a $500,000 death benefit from Haven Term policy, issued by MassMutual, for a $34 per month. If she waits until 40 to buy a policy, the starting price for the same amount of coverage would be $53 per month.
In other words, your life insurance policy might be more affordable than you think, and it might never be affordable than it is today. The following are sample quotes for a Haven Term policy, issued by MassMutual, for people in their 30s in excellent health.
20-year term life insurance rates Age Coverage $250,000 $500,000 $750,000 $1,000,000 25 Male $13.61 $19.76 $26.64 $33.52 Female $12.07 $16.95 $22.42 $27.90 30 Male $13.82 $20.19 $27.28 $34.37 Female $12.50 $17.82 $23.72 $29.63 35 Male $14.93 $22.34 $30.51 $38.67 Female $13.39 $19.33 $25.99 $32.66 40 Male $21.32 $34.59 $48.88 $63.17 Female $18.01 $28.27 $39.41 $50.54 Source: Haven Life
5. You could avoid medical hurdles
Your health also plays a big role in your ability to get life insurance coverage and the rate you’ll pay for it. Healthier adults pay lower rates because they’re considered less risky for the insurer. So insurers typically require applicants to go through a medical underwriting process.
For example, when you apply online for a term life insurance policy from Haven Life, you have to answer questions about your personal health history and your family health history. Your responses will be verified with a third-party vendor such as the Medical Information Bureau.
Haven Life offers the Instant Term process in which some applicants ages 18–59 seeking a $1 million death benefit or less might meet the criteria that allows them to finalize coverage without a medical exam, based on the information they provided during the application process.
You can complete an application to find out if you qualify to skip the exam. (Keep in mind that it’s always very important to be honest in the application process. The issuance of the policy or payment of benefits may depend upon the answers given in the application and their truthfulness.)
The longer you wait to apply for life insurance, the greater your chances that you’ll develop health issues that will result in you having to pay a higher rate for coverage – or make it harder for you to get coverage.
So if you have a need for life insurance coverage, lock in an affordable rate while you’re in your 30s and still healthy.
6. Your family needs cash for funeral expenses
Losing you will be hard enough for your loved ones. You don’t want to make a bad situation worse by leaving your family on the hook for your funeral costs.
A funeral, cremation or burial with a memorial marker can easily cost upwards of $8,000, according to the National Funeral Directors Association. A life insurance policy’s death benefit could be used by your family to pay for those costs.
If you didn’t have life insurance, your spouse or other immediate family members would need to come up with the cash to pay these expenses at the same time they’re grieving your death.
7. You need to protect your business
If you have any business dealings, life insurance can be important for succession planning. Let’s say you buy and sell real estate for a profit. What would happen if you passed away in the middle of a deal? What if you flip houses for a profit? How would your family handle your project if you passed away during a flip or a major remodeling job?
Your family could face similar struggles if you run a small business that buys and holds inventory, has business-related debt or has ongoing business expenses to cover. If you buy enough life insurance, on the other hand, you can leave behind enough cash for your family to deal with your business holdings the way you would have wanted.
8. You’ll have one less thing to worry about
Want something simple to check off your to-do list? Apply for affordable life insurance online. Thanks to modern technology, buying a policy is easier than ever.
If you apply for term life coverage online and are approved for a policy, your rates are locked in through the specified term length, as long as you continue to pay premiums.
What kind of life insurance should a 30-year-old buy?
There are two types of life insurance that are commonly purchased: term and permanent. Term life insurance provides a simple, affordable way to help financially protect your family for a specific period of time – typically 10, 15, 20 or 30 years. If you die during that period, your insurer will pay a death benefit to your beneficiaries. And you can get this coverage for less than the cost of many everyday expenses.
Permanent life insurance comes in a few varieties – the most common being whole and universal life. Unlike term, permanent policies provide coverage for a lifetime and include a cash value component that can grow or decrease over time. These features are why permanent policies can cost anywhere from 5 to 20 times more than a term life policy.
So, which is the right choice for an individual in his or her 30s? That will depend on your budget and what you want from a life insurance policy. For many, though, term life insurance is a good, affordable way to put coverage in place.
How much coverage does a 30-something need?
While individual life insurance needs vary, you can get a general sense of your coverage needs by taking a closer look at your income.
If you’re earning $75,000 per year and want to replace your income for five to 10 years (a standard recommendation from experts), you’ll need a term life insurance policy with a death benefit worth $375,000 to $750,000. If you don’t have an income because you’re a stay-at-home parent, that doesn’t mean you don’t need coverage. If you’re no longer around, your spouse or partner would have to pay for child care and other tasks you typically handle, such as cleaning your home.
So when figuring out how much coverage you need, you should factor in the following:
- Lost income and living expenses, like rent or daily bills
- Debts you leave behind
- Child care if you are a stay-at-home parent
- Funeral, burial, and other final expenses
- College expenses for your children
- Unpaid medical bills or taxes
If you have children, carry substantial debt or own a business, you may need more. Again, a life insurance needs calculator can help you make that decision.
What’s the best term length for people in their 30s?
In addition to choosing how much coverage you need when buying term life insurance, you need to decide how long you want your policy to last. You want the coverage to be available when your family needs it most. That could mean until your mortgage is paid off or until your kids have graduated from college.
Fortunately, you have plenty of options available to you, especially in your 30s. You can buy term life insurance coverage for 10, 15, 20, or 30 years, depending on your needs. Shorter-term policies tend to cost less. But saving a few dollars each month on premiums might not be worth it if you die shortly after your term is up and your family is left without protection.
While longer policies tend to cost more each month, they do offer a longer span of coverage that may bring peace of mind during that period.
Why buying life insurance in your 30s is simpler than you think
If you’ve been putting off purchasing life insurance because you think it will be too much of a hassle, think again. You can tackle this financial task in 30 minutes or less.
So, apply for a policy, get the coverage you need and gain peace of mind knowing that your loved ones will be protected.
Cameron Huddleston is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. She also is an award-winning journalist who has been writing about personal finance for more than 17 years. You can learn more about her at CameronHuddleston.com.
The information provided is not written or intended as specific tax or legal advice. Haven Life Insurance Agency does not provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.