How Much Life Insurance Do I Need in My 30s?
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When you’re in your 30s, you might be thinking about settling down. Maybe you’ve already started a family or plan to have children in the near future. If any of this resonates with you, then it’s time to learn how you can protect your family’s long-term well-being with life insurance.
In this article
What is life insurance?
Life insurance is a contract between an individual (the policyholder) and an insurance company. In exchange for regular premium payments, the insurance company provides a financial benefit to designated beneficiaries upon the death of the insured person. This financial benefit, known as the death benefit, is typically paid out as a lump sum and is intended to provide financial security to the beneficiaries after the insured person's death.
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How much life insurance do I need in my 30s, and why?
The amount of life insurance that you need will depend on several factors. Some experts suggest that you follow the rule of thumb of purchasing a policy with a payout of 10x your annual income. By doing this, you are essentially leaving a death benefit that can act as an income replacement for your loved ones. Using your current income can be a good place to start, but there are other factors you might want to consider as well. Some questions to ask yourself include:
- Does anyone else (such as a spouse or dependents) rely on the money from my annual salary? How much does my family need for current and future expenses? Am I a sole earner?
- Do I have any debts that would be transferred to my family if I passed away? This could include a mortgage, private student loans, or even your credit card debt.
- Are there life expenses that I want to help my children pay for, such as their college tuition or other education expenses?
- Should I leave an amount of money set aside for my end-of-life expenses, such as funeral costs?
- How much coverage do I need if I want to provide long-term financial support for my family?
Types of life insurance
Now that you’ve decided to purchase a life insurance policy, it’s time to find the best option for you and your family. There are pros and cons to each policy type, and the right policy for you will depend on what you intend to use your life insurance plan for. For example, do you want the policy to include riders for any living expenses? You should also keep your budget in mind when selecting a policy. Let’s take a look at the different types of life insurance.
Term life insurance
Term life insurance is exactly what it sounds like – a life insurance policy that lasts for a set number of years, known as the term of the policy. A policyholder can find term life insurance policies that last 10, 20, 30, and sometimes even 40 years. These policies can be an attractive option because they tend to be the most affordable life insurance policy.
If you decide on a term life insurance policy, it’s important to think about what you’ll do when the term ends. Some policies come with the option to convert the term life insurance policy to a permanent life insurance policy when the term ends. This can be a good option because it’ll allow you to keep a fixed premium for the rest of your life.
Another option that a life insurance company might offer is to renew the term life insurance policy annually after the term ends. This option typically means that your life insurance policy premium could change each year.
Permanent life insurance
Permanent life insurance or whole life insurance policies remain active for the entire life of the person who is insured. These policies are usually more expensive than term life insurance policies. However, they also tend to come with benefits that you can’t get from a term life insurance policy.
One reason to consider whole life insurance policies is because they can also be used as part of your overall investment strategy. Whole life insurance policies have a cash value, which is separate from the death benefit that gets paid out to your beneficiaries.
The cash value builds up over time, and each time you pay your insurance premium, some of that premium goes toward building the cash value. You can use the cash value of your policy to pay your premiums, or you can borrow against the cash value of your policy to essentially give yourself a loan.
If you decide later in life that you no longer need life insurance policy, you may also be able to surrender the policy. This allows you to receive the cash value of the policy in full.
Up to $2 million in coverage
- Get covered in 5 minutes.
- 95% of customers approved.
- No Hassles. No Gimmicks. Easy Application.
- Non-Commissioned Agents.
- Ages 20+
- 100% Online Application.
- Fast Coverage.
Why get life insurance in your 30s?
Lock in lower premiums
Term life insurance rates are largely based on your age. Generally speaking, the longer you wait, the more you’ll have to pay in insurance premiums. If you purchase a life insurance policy when you are 30-year old, you’ll be able to lock in your insurance premium and avoid paying more later.
Secure coverage
Life insurance companies usually consider your health when deciding whether to insure you and what your insurance rate will be. While you’re in your 30s, you’re probably still relatively healthy. As you get older, you might be at higher risk for developing medical conditions that could lead to higher premiums or make you ineligible for a life insurance policy.
Financial protection for your loved ones
If you have a spouse or children, they likely depend on your income for living expenses. Even if you don’t have a spouse or dependents, your loved ones could still be impacted financially if you pass away unexpectedly. This is especially true if your parent or another loved one has cosigned a loan for you in the past. By having a life insurance policy with named beneficiaries in place, you can provide financial security for paying off debts and future expenses.
Estate planning
Whole life insurance policies come with a cash value component that you can use throughout your lifetime. It can be a valuable asset to your financial plan as it can and allow you to borrow against your cash value to help fund other expenses.
How to choose the right life insurance plan in your 30s
Choosing the right life insurance plan in your 30s is an important decision that can provide financial security for you and your loved ones. Here are some steps to help you make the right choice:
Assess your needs
Consider your financial obligations, such as mortgage payments, outstanding debts, and future expenses like your children's education or spouse's retirement. Estimate the amount of coverage needed to ensure your family's financial stability in case of your untimely death.
Determine the type of life insurance
There are two main types of life insurance: term life and permanent life. Term life insurance provides coverage for a specific period, such as 10 year term, 20-year term, or 30 years, and pays out a death benefit if you die during the term. Permanent life insurance, such as whole life or universal life, provides coverage for your entire life and includes a cash value component that can grow over time.
Consider your budget
Evaluate how much you can afford to pay for life insurance premiums. Term life insurance typically offers lower premiums compared to permanent life insurance, making it more affordable for many young individuals in their 30s. However, permanent life insurance offers lifelong coverage and cash value accumulation, which may align better with long-term financial goals for some individuals. Use a life insurance calculator to get an idea of the premiums.
Compare quotes and coverage options
Obtain life insurance quotes from multiple insurance companies and compare the coverage options they offer. Pay attention to the coverage amount, premium rates, policy terms, riders (additional benefits), and the financial strength and reputation of the insurance provider.
Assess your health and lifestyle
Life insurance premiums are influenced by factors such as your age, health, and lifestyle habits (e.g., smoking, alcohol consumption). Undergo a medical exam if required and provide accurate information about your health and habits to ensure you receive an appropriate rate.
Review the policy details
Carefully read the policy documents and understand the terms and conditions, including coverage limits, exclusions, premiums, renewal options, and any penalties for early termination or changes to the policy.
Revisit your coverage periodically
Life circumstances change over time, so it's essential to review your life insurance coverage periodically, especially after significant life events such as marriage, the birth of a child, or a change in employment. Adjust your coverage as needed to ensure it continues to align with your financial objectives.
Up to $2 million in coverage
- Get covered in 5 minutes.
- 95% of customers approved.
- No Hassles. No Gimmicks. Easy Application.
- Non-Commissioned Agents.
- Ages 20+
- 100% Online Application.
- Fast Coverage.
Best life insurance companies for 30-somethings
If you work a corporate job, you’ve probably had life insurance policies presented to you in the workplace. But you shouldn’t purchase the first policy you come across. Here are some companies that offer great life insurance coverage for people in their 30s.
Nationwide
Nationwide is a popular option for life insurance. The insurance provider has several policies to choose from, including term life, whole life, universal life, variable universal life, and indexed universal life.
For term life insurance, the Nationwide Guaranteed Level Term policies can be a good option. It provides affordable coverage with rates that are guaranteed not to increase during the length of the term. When the term ends, you have the option of converting the policy to a permanent policy as long as you are under the age of 65 when you convert the policy. You can also renew the policy annually after the term expires up until you reach the age of 95.
In addition to providing a death benefit, Nationwide’s life insurance policies can come with living benefit riders. Most policies are eligible for these add-ons at no additional cost. The chronic illness benefit, critical illness benefit, and terminal illness benefit all allow you to receive a portion of your policy’s death benefit to help cover the expenses of your treatment. Nationwide also offers a Children’s Term Insurance rider that you can use for your biological children, stepchildren, or legally adopted children.
Pacific Life
Pacific Life offers four types of policies – term life insurance, universal life insurance, indexed universal life insurance, and variable universal life insurance. The company’s term life insurance policies offer affordable coverage in 10, 20, or 30-year terms. The policies can be renewed after the term ends until you are 95 years old. These policies also don’t require a medical exam before receiving coverage, even for death benefits up to $3M.
Universal life insurance policies from Pacific Life come with guaranteed minimum interest crediting rates and customizable coverage. The death benefit amount of these policies can be increased or decreased after you’ve purchased the policy. You can also take advantage of flexible premiums, which allow you to pay your life insurance costs when it’s most convenient for you.
Pacific Life offers survivorship policies as well, which allow you to use your life insurance to plan for your and your spouse’s estate and legacy. The death benefit of these policies can be used to pay estate settlement costs. This can be a good option for couples who have significant assets and need coverage for their estate or business holdings after both spouses are gone.
There are some riders that are available from Pacific Life as well. Policy availability varies by state, so it’s a good idea to get in touch with Pacific Life if you want to see what riders might be available for the policies in your state.
State Farm
State Farm offers term life policy, whole life policy, and universal life insurance policies. There are also a few riders that you can purchase to customize your policy to meet your family’s financial needs.
The Select Term Life insurance policies are available in 10, 20, and 30-year term lengths. If you purchase one of these policies while you’re in your 30s, you’ll be able to select any of those term lengths. You can add a Children’s Term Rider to these policies. The Children’s Term Rider is available for children up to the age of 25 and can be converted to permanent life insurance at that time. You can also purchase a Waiver of Premium for Disability Rider, which allows your premium to be waived if you’re disabled for six continuous months.
There are quite a few permanent life insurance policies to choose from if you go with State Farm. Each policy is designed with a different goal in mind. For example, the Single Premium life insurance allows you to make one premium payment and receive the benefits of the policy for the rest of your life. There are also policies that are designed to cover final expenses such as burial expenses.
If you have a spouse, you might also want to consider a couple of State Farm’s universal life insurance policies. The Survivorship Universal Life Insurance policy covers two people and pays out the benefit when the second of the two passes away. There is also the Joint Universal Life Insurance policy, which covers two people and pays the death benefit when the first of the two passes away.
FAQs
Do I need a medical exam to get life insurance?
It depends on the type and amount of coverage you're applying for. Many life insurance policies require a medical exam to assess your health and determine your premiums.
Can I buy life insurance for someone else?
In most cases, you can only purchase life insurance for yourself or for someone for whom you have an insurable interest, such as a spouse or dependent child.
Can I change my life insurance policy?
Yes, you can typically make changes to your life insurance policy, such as increasing or decreasing coverage, changing beneficiaries, or converting a term policy to a permanent policy. However, some changes may require underwriting approval.
The bottom line
Whether you’re living the single life or settled down with a house and kids, life insurance is worth considering while you’re in your 30s. Your young age can help you get cheaper life insurance premiums than you would if you waited until you were older. You might also have more insurance options.
When choosing a life insurance policy and the amount of life insurance, you’ll need to consider your financial obligations. Everyone’s financial situation is different, and it’s important to find a policy that will be appropriate for your long-term financial plan and provide enough life insurance for your loved ones. Take some time to explore life insurance policies and life insurance rates to find the one that meets your financial and coverage needs.
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Writer
Ashley Hart is a lead copywriter and digital marketing expert covering finance, law, real estate, music, entertainment, health and wellness.
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