Stages of Life: When Do You Need to Purchase Life Insurance?

Think you don't need life insurance? If you've hit these milestones, you may be wrong.

August 7, 2008
Sponsored by Prudential Association and Affinity Marketing

If you're like many Americans, you may unwittingly be putting your family at risk of a financial disaster. A recent report conducted by LIMRA finds that nearly a third of Americans don't have any life insurance coverage. And among those people that have coverage, 40 percent believe their current amount isn't enough.1

Why do so many people lack insurance protection? Many people put off purchasing life insurance because they cringe at the thought of planning for their own demise. However, unpleasant as it may be, your decision to purchase life insurance can impact your loved ones' plans for the future. That's because a life insurance benefit can be used by your loved ones to pay for everything from final expenses like a funeral, to living expenses such as mortgage payments, student loans and groceries.

But the persistent feeling among consumers is that, despite the odds, they are somehow immune to the hard reality of an untimely death. The truth is, a 35-year-old man has a one-in-six chance of dying before reaching retirement age. The odds are only slightly better for a woman of the same age, who has a one-in-nine chance of dying before age 65.2

When Should You Buy Life Insurance?

Most people who have financial obligations such as a spouse or partner, kids, an elderly parent, a business or outstanding loans should have life insurance. But, since your needs can grow as your life changes, there are some milestones that should trigger a re-evaluation of your current coverage. For instance, review your insurance needs when you:

  • Get married: When two people combine their lives, they bring their debt along with them. Purchasing enough insurance to make sure your new spouse has money at hand to settle your financial obligations, as well as provide for the future if you were to die, is an important step in building a life together.
  • Buy a house: Mortgage payments and living expenses in many instances require two incomes. Without one income, mortgage payments may soon be too much for a surviving spouse to handle. Even if your spouse doesn’t work, life insurance for him or her is still important because of all of the roles he or she plays in maintaining your lifestyle. Without your spouse, you may have to pay someone to handle the tasks previously done by your spouse.
  • Have a child: Life insurance can help pay for child care expenses — from day care to college tuition — should you or your spouse die. As your family grows, so should your life insurance coverage.

As your lifestyle changes, so should your life insurance coverage amount. And while everyone's needs are specific to their circumstances, many insurance professionals recommend a benefit amount of five- to 10-times your annual salary.

Don't wait for a sudden tragedy to force you to examine what your life insurance needs are — act soon to make sure your family is protected with the right amount of insurance coverage.

For more information, visit Prudential Association and Affinity Marketing.

1 Facts About Life 2006: America's "Love-Hate" Relationship with Life Insurance, September, 2006.

2 The Life and Health Insurance Foundation for Education, (LIFE), The Changing Face of Mortality Risk in the United States, by Daniel Theodore, FSA, Milliman, Inc., Sept. 1, 2007.