Find out why life insurance should strongly be considered in your 30s.
When you’re in your thirties, you might not consider yourself to be young, but neither do you feel particularly old. It’s an age when you’re starting to do less of what you want and more of what you need to do to fulfil your obligations and responsibilities – and that includes looking at taking out life insurance to protect the people and things that you love.
Here's why you need life insurance in your 30's
While some people think that 30 is too young to be considering life insurance, it's actually a good time to get your finances ready for the future. Some circumstances you may face in your 30s include:
- Financial dependents. By the time they turn 30, many people will have a partner or a family. These are important people who you would want to protect financially in the event of unexpected illness or death.
- An increase in wealth. You may also be on the cusp of a burgeoning career and starting to earn more money. Your increased salary, corresponding lifestyle and assets (e.g. a mortgage) need to be protected as well.
- Life insurance doesn't just cover death. You can customise cover to protect yourself from major injuries, illnesses and disabilities.
How much does life insurance cost for a 30 year old?
We reviewed quotes for a policy with a $500,000 lump sum and found some interesting differences between 30 year old males and females.
|AIA Priority Protection||$30.13||$24.21|
|Asteron Life Complete||$30.18||$24.37|
|TAL Accelerated Protection||$30.48||$24.12|
|Zurich Wealth Protection||$30.91||$25.57|
|BT Protection Plans||$33.37||$25.43|
|AMP Flexible Lifetime Protection||$33.71||$28.15|
Quotes are taken from our quote engine and based on a 35 year old office worker who is a non-smoker. Data last checked as accurate February 2017.
What's the advantage of getting life insurance in my 30s?
The benefits of life insurance, whatever your age, depend on the type of insurance you have. Most policies include financial compensation for your beneficiaries if you die unexpectedly and for yourself and your dependants if you are unable to work.
The key advantage of taking out life insurance in your 30s is the cost. The fact is that your premiums will be based on your young, healthy status and will be cheaper than when you apply later as an older or less healthy person.
The cost of life insurance only goes up from here
What factors should I consider before getting a policy at this age?
There is a variety of different factors that need to be considered when deciding whether to take out life insurance, what types of cover to get and how much cover you’ll actually need. These can include:
- Your family situation. If you have a partner and children you need cover to provide for them in your absence.
- Your assets. If you have a house, car(s) or investment portfolio, you’ll need to cover their cost if you die or are unable to work.
- Your debts. If you have loans, a mortgage or credit card debts, you’ll need cover to pay them off so your family aren’t left with them.
- Other insurances. If you have other forms of cover such as home and contents, car and business insurance, you’ll need cover to maintain them in your absence.
- Your career. If you are in a high paying job or run your own business, you’ll need income protection in the event that you are ever unable to work.
What types of life insurance do I need to consider
There are several types of life insurance policies providing cover for different eventualities. A normal life insurance policy should include cover for the following:
- Life cover. A lump sum payout if you die or are diagnosed with a terminal illness (less than 12 months to live).
- Trauma insurance. A lump sum payout if you are diagnosed with one of a specific list of illnesses such as heart attack, cancer or stroke.
- Income protection insurance. A replacement income of up to 75% of your normal income if you can’t work due to illness or injury.
- Total and permanent disability (TPD) insurance. A lump sum payout if you become disabled and are unable to work again.
As anyone can die at any age or become injured or ill without warning, these types of cover are as important for a 30 year old as they are for any other age group. The only question is the amount of cover you need in each category and as discussed previously, this will come down to your particular personal situation.
Premium options to consider in your 40s
Stepped vs level premiums
Once you’ve decided you need life insurance in your 30s, the next decision is whether to choose level or stepped premiums. Level premiums are considered best in the long term, as the premium you pay now will be similar to what you will be paying 10 or 20 years down the track. Level premiums are initially more expensive than stepped premiums, but they don’t become more expensive every year, apart from basic indexation rises to keep pace with inflation.
Short term vs long term benefits
On the other hand, stepped premiums start cheaper and increase every year in line with your age. This means that while you make a short-term gain now, you will be paying much more in 10 or 20 years for the same cover. One of the main reasons you might opt for stepped premiums as a 30 year old would be if you can’t afford to pay level premiums now or if you anticipate earning a much larger salary in your later years, which would take the sting out of the higher premiums.
Another option, which is becoming popular, is hybrid premiums. These are a cross between stepped and level premiums, with stepped premiums for the first few years to accommodate your tight budget and level premiums after that once you have found your financial feet and can afford the additional cost.