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Buying Life Insurance at Every Age: Ultimate Guide

Feb 17, 2023 | Insurance, Life Insurance

More than half of Canadians over 35 have life insurance, whether they purchase a private policy or participate in their employer’s life insurance benefits. Most people assume the insurance provides a safety net in the event of their death to cover funeral expenses. However, life insurance can be much more than that. 

Whether you’re twenty-something and just starting life or a middle-aged person with an established career and family, you should do what you can to protect your loved ones from an unpredictable future. With the guide to life insurance below, you will learn about different policies and how they can benefit you and your loved ones during every life stage. 

What Is Life Insurance Coverage For?

Before you can use the guide to life insurance below, it’s essential to know the definition of life insurance. It’s a contract between an insurance company and a policy owner. The policy owner makes premium payments each month in exchange for the insurer to pay a lump sum to the beneficiaries listed within the policy if the insured passes away. 

Though many Canadians hold life insurance policies, not everyone thinks they need coverage. It’s impossible to know what the future holds, and people die unexpectedly every day. By purchasing a life insurance policy, you can rest assured that your family will have financial support when you die. 

In Your 20’s, 30’s, 40’s, 50’s and Beyond, There’s a Life Insurance Policy for You

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Life Insurance for Every Stage of Life

Purchasing life insurance at any point in life can seem challenging. However, the more you learn how the coverage can benefit you and your loved ones, the less overwhelming it will be to find a suitable policy. The ultimate guide to life insurance below will show you why you should purchase life insurance regardless of age. 

Infancy

Though an infant cannot purchase a life insurance policy alone, you can invest in their future by providing coverage. With a whole life policy, you can accrue substantial cash-value savings with tax deference. 

When your child reaches the age of maturity in your province, you can transfer the policy to their name. At that time, they can withdraw the money from the cash account and use it for major life purchases, like a house or higher education. 

The good thing about establishing a life insurance policy for your child is that the policy will continue to fund the cash value account as long as someone pays the monthly premiums. Your child can then use the funds as retirement income. Our recent publication on life insurance for kids elaborates on this subject further.

Your 20s

The best time to buy life insurance is in your twenties. People who are young and healthy pay the least in life insurance premiums. Buying insurance at this age means you can lock in a great price, especially if you choose an otherwise costly permanent life insurance policy. 

Most people experience significant life changes in their twenties. They may graduate from college, get married, become parents, or buy a house.

When navigating these changes, it’s important to realize that your death or the death of a spouse can leave your household with a financial burden. Investing in a whole life or term life insurance policy that covers at least four times your annual income will put your family in the best financial position after death. Average monthly payments are around $23 for a non-smoking man and $15 for a non-smoking woman.

Your 30s

During your thirties, you’re more likely to have a family and extra living expenses. You might also have more debt from major purchases or loans. However, you can still purchase life insurance at reasonable rates if you are a non-smoker, healthy, and don’t have a risky lifestyle. More often than not, folks who engage in high-risk activities and hobbies such as skydiving, paragliding, extreme skiing, scuba diving and many other adrenaline-driving sports, are typically in their 30’s. While life insurance in this age range is usually very affordable, if you’re a thrill seeker, you’re going to pay high-risk insurance life premiums.

If you have a term life policy from your twenties, consider switching to whole-life coverage in your thirties, especially if you have a mortgage or children. As your income and responsibilities grow, so should your life insurance coverage. A half-million dollar policy for a man in his thirties will be around $22 per month, but it’s only $16 for a woman, on average. At this stage and beyond, it’s worth considering the differences between mortgage insurance and life insurance.

Your 40s

By the time you reach your forties, you may have older children, an established career, a home with money still owed on the mortgage, and other responsibilities. You might also start thinking about what will happen to your finances when you retire or worrying about funeral costs

The peace of mind and assurance from life insurance will help you navigate these concerns and responsibilities without overwhelming stress. You can still get affordable life insurance at this stage in life as a healthy non-smoker. Men will pay about $42 monthly, and women will pay around $29 monthly on average if they fit the ideal criteria. Other factors, such as health will play a role in how your life insurance premiums are calculated in your 40’s. We expand on the topic in this publication.

Your 50s

After completing the first fifty years of your life, your loved ones may still depend on your income. However, this period is when your finances become a major priority. 

For instance, you might be considering whether paying off your mortgage or investing is best. At this stage in life, you may be preparing a will for your children and spouse. Handling these tasks, and many others, become more important as age-related illnesses become more apparent. Unfortunately, declining health can lead to a spike in life insurance premium payments.

A non-smoking male in his mid-fifties would pay just under $100 a month on a life insurance policy worth half a million dollars. A woman under the same conditions would have a monthly payment of roughly $75. Even if you have a health problem, you can still purchase life insurance at this stage and establish a trust or liquid asset for your loved ones with the coverage.

Your 60s

Due to people having children later in life, it’s becoming common to see older parents with children in college or high school. This is also the age when couples experience changes in their relationship, including unexpected deaths. 

Despite the older age, it’s best to ensure that your loved ones have financial protection through life insurance. However, you should purchase a policy before age 65. Unfortunately, most insurance companies won’t insure people over that age. 

If you do not get life insurance in your sixties, your estate will be responsible for your funeral expenses and debt settlements. However, if you acquire insurance as a non-smoking man at this stage, your monthly payments will likely be around $370, but a woman may pay about $250. 

Yes, You Can Purchase Life Insurance at any Age

It can be done online, too.

Types of Life Insurance to Consider

When exploring any guide to life insurance, you’ll see that the market has many life insurance options. Not every life insurance product will suit you and your family’s needs. As you compare products, you’ll need to consider the type of life insurance that is right for your family and how much financial protection your loved ones will need. 

For instance, you could buy permanent or temporary life insurance or seek coverage that aligns with your budget for monthly insurance premiums. Perhaps you only want coverage that provides death benefits or the money the insurance company pays when you die. 

Below is an outline of the most common types of life insurance you’ll likely see while searching for an affordable policy with your life insurance preferences. 

Term Life Insurance

Term policies last up to 30 years, and you can buy them in five-year intervals. For instance, you may choose a term life policy that lasts ten years instead of 20 years.

They have an end date, but term life insurance rates don’t fluctuate during their period. However, policy owners can renew them at a higher price at the end of the term. 

Term life insurance is one of the most affordable options because it offers coverage without cash value life insurance. This insurance product is most suitable for anyone who wants coverage under specific circumstances. For instance, you could use the policy to cover the income your family would lose if you pass away or to cover a large debt. 

Though term life insurance starts at affordable rates, its renewal price might be unaffordable for some people. Purchasing a new policy may also be expensive if your life changes from the start of the first term to its renewal period. 

Factors that may affect your life insurance premium include:

  • Old age
  • Gender
  • Smoking
  • Poor health
  • Risky lifestyle
  • Poor driving record
  • Family history of chronic illness like heart disease, stroke or diabetes

Whole Life Insurance

Whole life or permanent life insurance is a policy that remains active throughout your life. Part of your monthly premiums will go into an account within your policy that generates cash value and interest over time. Insurance companies often include guarantees in permanent life insurance policies that ensure the policy owners won’t have higher premiums, altered death benefits, or variable interest rates for the policies’ cash value. 

People who want an insurance policy that lasts for a lifetime should consider whole life insurance. You will likely pay higher premiums to cover the policy’s guarantees, making the coverage more expensive. 

What Are the Benefits of Life Insurance?

Life insurance offers many benefits to policyholders and their families, including:

  • Tax-Free Payouts: Beneficiaries will receive a lump sum in death benefits, which are tax-free because the money isn’t considered income. 
  • Funeral or Burial Payments: The life insurance policy will cover your final expenses, which can be expensive. 
  • Retirement Income Supplementation: Whole-life and universal life insurance includes cash value, which can supplement your retirement income. 
  • Living Expenses for Dependents: Life insurance policies can be substantial enough to cover years of living expenses for surviving spouses, children, and other dependents. 

What Happens If You Pass Away in Debt?

Because death is often unpredictable, it’s possible to pass away without resolving your debt. Whether you owe institutions for credit card debt, mortgages, or loans, your family will become responsible for these payments when you die. 

If you purchase life insurance, you can relieve some of the financial burdens your passing may put on your loved ones. They can use your death benefits to pay for the bills and financial obligations you leave behind. 

Though most people begin to think about life insurance seriously in their thirties and forties, it’s vital to seek a guide to life insurance and explore your options much earlier in life if you have loved ones who depend on you. It’s better to establish a policy earlier in life than later.

Can You Rely on Employer Life Insurance?

It’s common for Canadian employers to offer life insurance as part of their benefits package. However, not every employee takes advantage of employer-based life insurance, which can be less expensive as a group benefit than an individual policy. 

It’s usually a good idea to have life insurance from your employer when the company offers it. However, life insurance through an employer won’t offer coverage amounts to that of a private policy. Be mindful that job situations can change quickly and without warning. If you leave your employer, you will lose your coverage, regardless of whether they fire you or you resign. 

You may have the option to participate in group life insurance with your next job, but the benefit is not a guarantee. Canada does not require employers to provide life insurance for workers. However, you can ensure your family has sufficient coverage by purchasing a private policy for unpredictable situations. 

How to Tell Which Whole Life or Term Insurance to Buy?

Though life insurance premiums will rise under specific circumstances, including old age, it’s better to secure your family’s future with a permanent or whole life insurance policy. If you’re unsure what type of policy is best for your household, consider these factors:

  • Your living situation and lifestyle
  • Your personal objectives
  • Your income and budget

You can better determine which option is right for you if you clearly understand your current stage of life and where you intend to be over the next few years. For instance, you might feel a 30-year term life insurance policy is sufficient due to your budget and lack of children. Alternatively, you might think whole-life coverage is more suitable if you have children, a spouse, and a mortgage. 

Sometimes, the best answer is a combination of several options. You could hold a term and whole-life policy to protect your family for the predetermined term period and provide backup coverage when the period ends. 

Have More Questions About Whole or Term Life Insurance?

Learn more about them here.

Get the Life Insurance You Need Regardless of Your Stage in Life

Despite an uncertain future, you can have peace of mind knowing that your loved ones will have financial protection with a life insurance policy if you pass away suddenly. A death can be devastating to a family and lead to financial hardships that are difficult to overcome. However, the guide to life insurance and assistance from Alliance Income Services Corp. will help you find the coverage you and your loved ones need. As an insurance technology company, Alliance Income Services Corp. aims to provide stress-free paths toward affordable insurance products. We specialize in helping clients find various insurance products, including health insurance, life insurance, seniors life insurance, joint life insurance, and more. Complete our easy-to-use quote form to compare insurance quotes today.

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