There’s no one-size-fits-all best age to get life insurance. However, I believe the best age to get life insurance is around age 30. And the best life insurance term to get at around age 30 is a 30-year term life insurance policy.
If you get life insurance at 30, you will likely get the best rates starting at the most important time of your life. It’s like locking in a 30-year fix rate mortgage at the lowest rate.
One of my financial mistakes was not getting a $1+ million, 30-year term life insurance policy before I had children. Now that I have two children, a similar 30-year policy costs 5-10X more due to age and health reasons.
I don’t want you to make my same mistake because I was unable to properly forecast my future. The longer I live, the more apparent it is that most of us go through a similar life arc. Most of us are also governed by the same rules.
Life is already complicated enough. We often forget what we should do until after the fact. If you are around age 30, you should put getting life insurance on your to-do list.
Why The Best Age To Get Life Insurance Is Around 30
The one constant in life is uncertainty. Every decision we make is a gamble. We try to make the most optimal decisions possible to live the best lives possible.
Unfortunately, even if we are right 80% of the time, we still get things wrong 20% of the time. When suboptimal things happen, we just need to accept the outcome and figure out ways to make better decisions in the future.
80 percent of the time, I think the best age to get life insurance is by 30 or around 30. Here are the reasons why.
1) The Average Age To Have Kids Is Between 26 – 31
The average age of first-time mothers in America is now about 26. While the average age for first-time fathers in America is now 31.
Ideally, your goal is to get life insurance a year before having kids. Thankfully, most can because it takes nine months from conception to birth.
In more expensive areas of the country, the average age to have kids is much higher. Without the help from The Bank Of Mom And Dad, it’s very common for first-time parents to be in their 30s.
Getting life insurance around age 30 fits a +/- 5-year window when the vast majority of people have kids. Therefore, you might as well put life insurance by 30 on your checklist. Life gets more complicated once you have kids. The more things you can cross off, the better.
2) Cheaper Rates When You’re Younger
Life insurance is cheaper for younger people because younger people are generally healthier and have longer left to live. Therefore, life insurance companies can charge less because they have a lower chance of paying out a life insurance claim.
Below is the average life insurance cost for men from PolicyGenius, a leading life insurance marketplace. PolicyGenius is my favorite way to get low-cost quotes from multiple carriers all in one place.
As you can see from the chart, the average monthly life insurance premium goes up for every coverage amount by age. The average 45-year-old man pays about double in life insurance premiums as the average 20-year-old man.
Notice how the average life insurance premium at age 30 costs pretty much the same as for a man at age 20. If you don’t have any kids in your 20s, you can rest easy knowing you won’t pay a much higher premium once you hit 30.
But notice how once you pass 35, the increased cost of life insurance starts getting noticeable. Therefore, around age 30 is the ideal time to lock in the best rate when life insurance becomes more important. You can think about your 20s as a “free ride” where you saved on life insurance premiums.
In your 20s, perhaps your employer-sponsored life insurance policy based on a multiple of your salary could be good enough. For example, my employer provided a free, automatic life insurance benefit equal to 3X our annual salary. By 28, I decided I wanted a little more, so I paid around $10 a month for life insurance coverage equal to 5X my annual salary.
3) The Median First-Time Homebuyer Is In Their Early 30s
After having kids, the second most important reason to get life insurance is when you buy a home with a mortgage. Being able to have a financial buffer to pay off the mortgage or cover the payments until your survivors decide what to do is beneficial.
According to the National Association Of Realtors, the median age for a first-time homebuyer is around 33. Ideally, you want to get life insurance right before taking on a mortgage. Therefore, getting life insurance around age 30 makes sense. If you pass away, you don’t want to put your debt burden on your loved ones, especially if you are a primary income source.
If you have no kids and no mortgage, then you probably don’t need life insurance, no matter your age. But if you’re already thinking about buying a home and starting a family, you might as well lock in an affordable life insurance policy beforehand.
4) Penalty-Free 401k And IRA Withdrawals Start At Age 59.5
For many Americans, surviving until their tax advantageous retirement accounts are accessible without penalty is an important goal. Therefore, getting life insurance coverage until that goal can be reached is a logical move. If you are in good health, getting a 30-year term life insurance policy is relatively affordable at age 30.
By age 60, everyone under the age of 35 who follows my 401k guide will likely end up a 401k or rollover IRA millionaire. With the combination of having over $1 million in your 401k or rollover IRA plus a sizable taxable investment portfolio, real estate portfolio, and more, life insurance should no longer be necessary.
5) Social Security Kicks In At 62+
For now, the earliest we can currently start collecting Social Security is at age 62. If the earliest age to start collecting Social Security increases, one may delay locking in a 30-year term policy or try and get an even longer policy, e.g. whole life insurance.
By our early 60s, we should have all our debts paid off. Most of our children should all be independent adults as well. Therefore, having life insurance should no longer be necessary once we are eligible for Social Security and penalty-free 401k or IRA withdrawals.
Better To Have A Little Too Much Coverage
It’s better to have a little too much life insurance coverage than a little too little. You can always reduce the amount of your coverage in time. However, you can’t always increase your coverage without a new underwriting process.
It is often when you need or want life insurance the most that it tends to cost the most. Your goal is to get life insurance before you truly want or need it. You’ll tend to pay much less.
Further, know that you are not locked into the entire term of your life insurance policy. In other words, if you decide to get a 30-year term policy, you can cancel at any time before the 30 years is up.
If you get richer than you had expected, you can cancel your 30-year term policy. Or, if you have a lot more health and financial issues than expected, you can keep your 30-year term policy and sleep easier.
Getting a 30-year term life insurance policy around age 30 is smart because you get to lock in the lowest rate for the most important period of time. Therefore, you get greater optionality value.
If I Could Get Life Insurance Again
In retrospect, at 28, I got life insurance at an appropriate age. I had just bought an expensive home with a big mortgage. After I hit 30, I started to think about marriage and kids. Before then, I wanted to focus most of my energy on my career.
However, my mistake was only getting a 10-year term policy at 28. Then at 35, I only renewed my policy for only another 10 years. I should have locked in a 30-year term policy at age 28 or renewed to a 20+-year term policy at age 35. This way, my two children would have been covered until they were technically adults.
As I come up for my life insurance renewal decision in 2022 at age 45, my existing life insurance company quoted me a rate of $425/month! That’s about 10X higher than what I’m currently paying.
At least I saved on premiums until this point.
Beware Of Going To The Doctor
Part of the reason for the big jump is due to my older age. But the majority reason is that I decided to go to a new sleep clinic when I was 36. I was paying full health care insurance premiums of about $1,500/month for two of us. I thought it would be nice to get some benefits and check out if anything could be done about my snoring since I hadn’t gone to a doctor in years.
When I arrived, the overzealous clinic wanted to run a bunch of tests. I agreed since my health insurance company would pay for it. However, the more you test, the more issues doctors will find to try and treat in order to make more money. That sleep clinic shut down two years later due to multiple complaints of overcharging.
Once something is in your medical records, it’s practically impossible to get it off. Therefore, always lock in a life insurance policy before you see a doctor for anything out of the ordinary. I had no idea a snoring visit could blow up my life insurance premium costs.
My Quest To Find Cheaper Life Insurance
After the birth of our second child in 2019, I was re-motivated to try and find more life insurance that wasn’t 10X higher like what USAA quoted me. Further, in 2020, I took on more debt by buying a forever home.
After checking with PolicyGenius, I was able to get roughly 40% cheaper life insurance quotes. It just goes to show that you should never fall in love with your existing insurance carrier.
For over 20 years, I’ve used USAA for all my insurance needs. I like their service and believed they would always give veterans and children of veterans the most competitive rates. However, that’s clearly not the case after shopping around. My wife paid about 50% more for her USAA life insurance quote for eight years before she shopped around as well.
If you want to save money, you should shop your auto insurance, homeowners insurance, and life insurance policies every 2-5 years. You will probably be surprised at how much you can save. We certainly were.
My Life Insurance Plan Going Forward
Between health, school, child behavior, work, and finances, parents already feel a tremendous amount of pressure. Getting life insurance is about anxiety management and relieving some of that what-if financial pressure. Personally, I’m all about using money to help alleviate stress nowadays.
Right now, I’ve got four options to choose from by mid-2022:
- Convert my term life insurance policy to a whole life policy to keep my best health status rate and build cash value
- Renew my term life insurance policy for at least 10 more years at a higher rate
- Grow liquid net worth by at least $1 million to cancel out the expiring life insurance policy
- Or go without life insurance after 2022 since we are technically financially independent
The ideal scenario is if I accumulate $1 million before my $1 million, 10-year term policy runs out and not renew. However, I’d probably have to accumulate closer to $1.5 million due to taxes as life insurance payouts are usually tax-free. And let’s be frank, if I’m going to re-retire soon, the chances of growing liquid net worth by another $1.5 million in this short of a time isn’t great.
In conclusion, if I had to choose one age, the best age to get life insurance is 30. If you get a 30-year term life insurance policy at age 30, you won’t have to go through my dilemma. Locking in a low rate for a long time period will give you the valuable option to keep or drop your policy as your life changes.
The second best age to get life insurance is the year before you have kids. Once you become a parent, you will gain an enormous amount of motivation to protect your family.
A Life Insurance Analogy
If you are a real estate investor, you will appreciate this analogy. It just came to me as I was finishing this post.
Locking in a 30-year term life insurance policy when you are 30 is like locking in a 30-year fixed-rate mortgage when rates are near an all-time lows. Over time, you will marvel at how cheap your fixed-rate mortgage or life insurance premium is thanks to inflation and your growing wealth.
What’s more, there is no life insurance origination fee unlike with getting a mortgage. If you’re looking to save money on life insurance, check online today. You can always cancel your term life insurance policy in the future at no cost as your needs change.
Readers, what do you think is the best age to get life insurance? Did you end up getting a 30-year term policy and then dropping it before the term was over? If so, why? What life insurance option would you choose if you were me?