Posted on July 31st, 2022.

Most people aren't thinking about life insurance in their 20s, but it's the best time to buy it because most people's health declines with age. The longer you wait to buy a policy, the greater the eventual cost.

An average 20-something or 30-something nonsmoker can expect to pay between $10 and $50 a month for a term life policy depending on the coverage amount. That's less than the cost of a gym membership to protect your family's financial stability in your absence.

Your life insurance needs change as you age, and you'll need to consider children, marriage, divorce, retirement, and caring for aging parents.

If you don't have life insurance, there are seven reasons you probably need it.

1. You're going to have a baby or already have children

"If you don't make it home and someone relies on your income to live, you need life insurance," Mark Williams, CEO of Brokers International, told Insider.

The birth of a child is usually a motivator to get life insurance coverage. Most people get life insurance to cover the mortgage, education, and other expenses so that their family can continue after they die. If you're planning to have a baby in the next year or so, now is a great time to buy life insurance.

If you're already pregnant and you're the breadwinner of the family, it's possible to buy life insurance, though you'll probably get the best rates if you undergo the medical exam before or after pregnancy, according to Policygenius insurance expert Logan Sachon.

2. You're planning to get married

There are some questions to consider before going down the aisle. Like, will you have individual or joint life insurance policies?

Certain life insurance products, known as joint life insurance policies, are geared towards married people. Joint life policies are beneficial for high-wealth couples seeking to lessen the impact of inheritance and estate taxes on their beneficiaries, according to Mark Williams, CEO of Brokers International.

If either person is bringing children from a previous relationship into the marriage, there should be a discussion about protecting the assets and inheritance of the children. For life insurance policies where the child is to benefit, a trust should be established because a child won't be able to access the proceeds if they're a minor.

3. You support aging parents financially

Ideally, your parents have already purchased life insurance as part of their retirement planning. However, according to a 2018 AARP Public Policy Institute report, about 6.2 million millennials and counting are acting as caregivers for a parent, in-law, or grandparent.

If you are caring for your parent at-home, in assisted living, or a nursing facility, life insurance with a long-term care rider will help you defray costs.

4. You have private student loan debt

If your parents co-signed your private student loans, life insurance means they won't be left with the debt if you die. Even if your parents weren't co-signers, you don't want the repercussions of having debt left behind to your estate, especially if you're married.

Federal student loans are discharged on the death of the borrower. Unfortunately, if you die, private student loans become part of your estate debt. It's at the discretion of the private lender whether to discharge your debt, according to the Student Loan Borrower Assistance program.

5. You work for yourself or have a family-owned business

If one member of the family is key to the business, their disability or death can cause revenue streams to go south, Silvia Tergas, a financial planner with Prudential, told Insider.

She recommends a business-owned life insurance policy and business-owned disability insurance that names the business as the beneficiary so it can continue.

Also, if you get a business loan, most lenders will require life insurance like decreasing term life insurance, where the bank is the beneficiary to payoff the loan in if the event the business owner dies. It's similar to getting life insurance to cover private student loan debt.

6. Your job is high-risk

"At the end of day, life insurance is risk management" to deal with "premature death, loss of income due to illness, or disability," according to Silvia Tergas, a financial planner with Prudential.

If you work in a dangerous or high-risk environment, you have a greater chance of dying than someone who sits at a desk all day. Jobs in aviation, construction, firefighting, mining, oil and natural gas, and a few others will almost always result in a higher premium.

Even if you have employer-provided group life insurance, if you leave your job (resign, retire, or are terminated), you lose coverage. Also, group life insurance may not be enough coverage. It is recommended that you typically select 10 times your annual income as your death benefit.

Being in a high-risk job increases the likelihood of disability. Disability insurance is like insurance for your paycheck if you are unable to work. Although many people probably have short-term disability through their employer, long-term disability insurance is the one that most people need and do not have.

7. You have extreme hobbies

If you're a thrill seeker with a penchant for extreme sports, you'll probably be deemed higher-risk by a life insurance company. But it's similar to having a high-risk job — you'll pay more to be insured, but the cost is worth it considering the likelihood you'll die from unnatural causes.

If you do have an extreme hobby — like rock climbing, scuba diving, or something equally thrilling — it's best not to lie about it on your life insurance application. If you die within the first two years your policy is active and you didn't disclose your regular high-risk activity, the insurance company has the right to decrease the death benefit, or cancel it all together.

As for the cost, you'll typically see either a higher base premium or an extra annual fee calculated as a percentage of your coverage amount. Every insurance companies assesses the risk of hobbies differently, so it's good to comparison shop if this applies to you.

To maximize the benefits of life insurance, it's wise to include a financial advisor, accountant, and estates attorney in your decision-making process to ensure you have proper coverage that adapts as your life changes.

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