Dave Says: When to Buy Life Insurance

Dear Dave,

I’ve noticed that the younger you are, the less expensive life insurance can be. I’m 32, and I’m still paying off my student loans. With this in mind, what’s the best age to get term life insurance, and what does it cover?

Kalina

Dear Kalina,

Simply put, term life insurance covers death. Having student loans doesn’t really matter when it comes to life insurance, either. If you have a family – or someone who is dependent on your income – you need 10 to 12 times your yearly income in a good, level term insurance policy. If you make $50,000 a year, that means you need a term life insurance policy with $500,000 to $600,000 worth of coverage. If you don’t have afamily or dependents, I’d recommend a simple burial policy of $10,000 to $20,000 to cover any final expenses.

Either of these would be very inexpensive for someone your age. Keep in mind that life insurance becomes costlier as you get older. The reason? Statistically speaking, the older you are the more likely you are to die. It’s not a fun thought, but it’s the truth.

Life insurance, or at least a burial policy if you’re single and have no dependents, isn’t one of the Baby Steps in my plan. But in your case, it’s a go-get-it-now adult responsibility kind of thing! 

—Dave