How much life insurance to buy in your thirties


Adam Cecil

Adam Cecil

Former Staff Writer

Adam Cecil is a former staff writer for Policygenius, a digital insurance brokerage trying to make sense of insurance for consumers. He is a podcast producer, writer, and video maker based in Brooklyn, NY.

Published June 9, 2016|3 min read

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A lot of people buy life insurance in their thirties, primarily because that’s a popular time to settle down and pop out a few kids. Most life insurance shoppers in their thirties have two major questions: is this the right time to buy life insurance and how much life insurance should I buy?Luckily, those two questions are easy to answer — it just requires a bit of math.

Calculating life insurance rates by age

Typically, life insurance rates increase as you get older. But the biggest rate increases don’t come because you’re growing older, they come because you’re developing medical issues. Let’s put it this way: getting older may lead to more medical issues, and more medical issues definitely leads to higher life insurance rates. (Age does play a part in determining your life insurance rates, but not as much as your medical history does.)Most shoppers in their thirties are still relatively healthy, with no major medical issues appearing on their records. Some may have undiagnosed issues that appear during the underwriting process — if you want to get ahead of the life insurance medical exam, see a doctor and get a physical before you apply for life insurance to get an idea of what to expect. (You can’t use these results on your application, but the life insurance medical exam is free, so all you’re losing is time. And no — you can't pay for your own life insurance medical exam.)In general, we’ve found that most people in their thirties get competitive rates from most of the top rated life insurance companies. Working with an independent agent also helps shoppers find the best rates for their specific profiles.

Calculating how much life insurance to buy

Figuring out how much life insurance to buy is a pretty straightforward process. All you need to know is some basic addition. (If you’d prefer to have someone else do the math for you, check out our life insurance coverage calculator.)First, consider the debts you’d leave behind if you died tomorrow. For most people in their thirties, this includes a mortgage, some credit card debt, and private student loan debt. You’ll want a policy that has at least enough money to pay off these major debts.Second, consider how much potential savings you’ll lose. For example, let’s say you and your partner are saving for your kids’ college educations. A lot of shoppers end up buying enough to pay for all four years of college for all of their kids. For a good way to estimate how much money they’ll actually need, check out our estimate of what the cost of college will be in 2028. Some people also put money aside for their partner’s retirement. Talk to your partner about how much you’d like to put aside for that fund.

Third, consider income replacement. If you’re not alive, you’re not making money. While most shoppers do not buy enough to replace their income for the next thirty years, as that amount of term life insurance may become prohibitively expensive, many do like to set aside a few years of income replacement to help ease your partner's transition to a single income.Finally, think about how long you want your term life insurance to last. It’s smart to buy life insurance that lasts longer than your longest financial obligation. What does that mean? Let’s say you have 28 years left on your mortgage. It makes sense to buy a 30 year term life insurance policy. Any less, and you’re leaving yourself (or rather, your surviving dependents) open for a coverage gap. If you don’t have a mortgage, you can use your youngest child’s college graduation date as a rough estimate of your term.

Work with an independent agent

An independent agent can not only help you compare rates from a variety of companies, but they can help you decide how long your policy should last and answer all of your life insurance questions. Independent agents aren’t incentivized to sell you life insurance from a particular company. They’d rather see you get the right policy.

Image: Kyle Cesmat