Changing Life Insurance needs with Life Stages

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Thank you for the regular feedback on the articles and engaging interaction during the #AskTheActuary sessions. Your responses motivate me to find interesting and relevant topics and then explain them in an easy-to-understand language. For this week, I have carried out an analysis on changing needs of life insurance protection with various life stages. I did another article on similar lines wherein I argued why insurance portfolio, in general, needs a periodic review. In here, the focus is on life insurance protection needs with changing life stages!


Before we jump on to understand the changing life insurance needs with age and hence life stages, it is crucial to appreciate when and why life insurance is needed. There are primarily two reasons that trigger the need for buying life insurance. First, when one has dependents and second when one has an outstanding loan. However, the pre-requisite is that the life insured should be an earning member. Essentially, the question one needs to ask before buying life insurance is, “if I die today, what would be the financial impact to those dependent on me?”


In this article, we answer this very question at various life stages and estimate the life insurance need for a sample case. I must add that the graph below is only for illustration and is done with an intention to impress upon the key takeaways!

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Age 21-30 year: You have got your first job and hence “eligible” for buying a life insurance policy.  However, you need a life insurance policy in case you have an outstanding education loan and/or dependent parent(s).

The education loan is expected to be paid-off towards the end of this life stage and the cover required to take care of the parents reduces with time, which in turn is linked to their life expectancy with advancing age.


Age 31-35 years: Congratulations on your wedding! With marriage comes additional responsibilities and taking care of the partner financially is one of them. This is the just the right time to re-visit the life insurance cover as your education loan has been paid off but now you have one more life to take care of along with the aging parents!


Age 36-40 years: Now you are a proud parent of young kid(s). Like every other parent, you would want the future of your kid(s) to be secured in case of an unfortunate event and hence it might be a good idea to increase the cover till the time your young ones can fend for themselves!


Age 41-50 years:  You are doing great on the professional front and have decided to move into your own home. Assuming you have taken out a loan to fund your new abode, you would want your survivors to free from the burden of paying the loan in case of an untimely death. The best way to do it is to have an appropriate life cover for it. The loan continues to decrease as you pay them off and so does the need for the life cover. Additionally, by now you would have accumulated substantial savings and that acts as a form of self-insurance.

Lastly, it is that stage of life when parents kick the bucket implying the need for insurance cover reduces further!

Age 50-65 years:  You are in the last leg of your earning life and have been accumulating wealth at a relatively higher rate to take care of the retirement. The kid(s) are adults now and have started earning already. The home loan has also been paid-off.

The only person you need to take of financially is the spouse and hence would need a smaller cover till the time you retire. And once you retire, you don’t need a life insurance cover given in an unfortunate event you meet your maker, no one is financially impacted!

With your “retirement”, I also intend to “retire” for a while but not before I have reminded you about the upcoming #AskTheActuary session on 5-April-2019, Monday at 8 PM SGT. Feel free to send your queries over email to or tweet your questions!

Disclaimer: The article has been written with an aim to broadly explain an otherwise complicated and technical topic for readers with little or no insurance background. Hence, it doesn’t have finer details but is still broadly correct. The readers are recommended to take advise from their respective financial advisers before taking any financial decision.

About the writer: Mr Sumit Ramani is the Chief Actuary of fidentiaX. He is a qualified Life actuary and a computer science engineer with over a decade of experience in (re)insurance business with a focus on modelling of life and health products, peer review and business analysis.