Why it Pays to Get Life Insurance in Your 30s

Life insurance is a financial product that’s easy to forget about, or one that we don’t like to think about. Life insurance policies pay a financial benefit when we:

die,
become totally and permanently disabled,
become temporarily disabled and unable to work, or
suffer a trauma (such as a heart attack or stroke).

You should seriously consider taking out life insurance as a financial risk management strategy, and the early you can do it the better. There are four key reasons why you should get life insurance in your 30s:

1) the premiums are cheaper,

2) you’re likely to have more debt in your 30s than you will at any other time in your life,

3) you’ll most likely have young children when you’re in your 30s, and

4) the automatic level of life insurance cover that you may have in your super fund may not be enough.

Let’s look at each of these reasons in some more detail.

Cheaper premiums

Life insurance premiums are cheaper if you start a policy when you’re younger. That’s because younger people are generally healthier and less likely to die, become permanently or temporarily disabled, or suffer a trauma.

There are two types of life insurance premiums: stepped and level. Both are cheaper if you take out the insurance when you’re younger. Stepped premiums increase with age and CPI.

Level premiums on the other hand only increase with CPI. The earlier you start, the cheaper they are. It makes financial sense to lock in lower level premiums as early as you can.

Your level of debt

Your 30s is typically a period in your life when you hold the most debt. You’ve probably just taken out a mortgage, and you might also have a car loan or other debt.

According to the most recent study from Roy Morgan research, the average Australian owes $488,875 on their home loan. Even if your mortgage isn’t that high, it’s likely to be higher in your 30s than it ever will be.

It’s important to consider how your partner or kids would be able to manage that level of debt without your financial support. Life insurance will help to give you peace of mind that your debts will be taken care of if you pass away or if you can no longer work due to illness or injury.

Your kids

Your 30s is also a time in your life when you’re most likely to start a family. Your kids are financially dependent on you until they reach adulthood and raising kids can be expensive. According to the latest research from the Australian Institute of Family Studies, the minimum cost of raising a child in Australia is currently $140 per week. That’s more than $7,000 per year and nearly $150,000 over 20 years, and that’s for a bare minimum standard of living.

Again, life insurance can give you the peace of mind that your children will be financially taken of in the worst case scenario.

Default life insurance cover in your super fund

The automatic level of life insurance cover that you may have in your super fund is often limited and may not be adequate for your financial needs. Not to mention this insurance may no longer exist due to the ‘Protect Your Super’ legislation. This type of automatic cover isn’t tailored to your individual circumstances and it may have exclusions that affect policy claims.

How we can help

At Qi Wealth, our experienced, expert team of insurance specialists can help to ensure that you have the right level of life insurance coverage to meet the needs of your loved ones. We can also help you arrange life insurance coverage via your self-managed super fund (SMSF) if you are a member of one. We’ll take the time to understand your individual circumstances so that we can provide you with the best possible advice. We develop long-term, trusted relationships with our clients.