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Term Life Insurance for a 30 Year Old

by Jeff Rose on February 20, 2012 · 8 comments

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30 year term life insurance When you reach your 30s, life is in full swing. If you’re like me, you’ve been in your home for a couple years, you have new kids on the way, and you’ve enjoyed a few pay raises at your job. You start being more financially conscious about your family need, and term life insurance becomes more of a priority.

If you read the previous posts talking about buy life insurance in your 20s, you’ll see how the thought process can change. When I bought my first term life insurance policy at the age of 26, I thought $250,000 was more than enough. Since at the time it was only my wife and I, it definitely was a good amount, but reflecting back I probably should have bought more.

In my 30s, I welcomed the arrival of not only our first son but our second and third as well. After our first son arrived, it was only matter of weeks before I realized that I needed more life insurance. The thought of something happening to me and my wife having to not only run the household but also take care of our little son, I knew that I needed more. I immediately then got a quote for a $500,000 30-year term policy that brought my grand total up to $750,000.


30 Year-Olds and Life Insurance Amounts – How do You Compare?

How does this compare to you and your situation? First a couple things about where we live. We live in the Midwest, so the cost of living is relatively cheap. Our first home was a modest home, and our mortgage was only $109,000. For those of you who live in larger metropolitan areas, I realize it almost sounds like a joke. We had very little debt, so the house was our only major liability. At the time, $750,000 of life insurance coverage was more than ten times my income, so I felt we definitely had enough.

Still, this feeling of security lasted up until we had our second son. We also were in the process of building a new home and having that gut feeling again, I decided I needed more insurance coverage for my family. That’s when I decided to buy an additional term life policy totaling $1.5 million. I kept the other two in force so the total coverage was $2.25 million. Many of you may think that this is excessive and it definitely could be, but as a 30-year-old male who wanted to make sure that his family was more than taken care of if anything happened to him, I felt it was necessity.

In total, my premiums for all three 30-year term life policies was roughly $2400.

Please note, after a few years I ended up refinancing my life insurance policies and reducing how much I paid.

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Rules of thumb of buying life insurance in your 30′s

There are many different ways you can go about calculating how much life insurance you need. The first general rule of thumb that many people use is to take 10 times your annual income. So, if you’re making $60,000 a year, times that by ten and you should have at least a $600,000 term life policy. One point I would like to emphasize in that calculation is that I think that is the bare minimum, so anything less than that and you’re under covered, but in reality you should have more. While you’re in your 30s, most likely you will be working at least another 30 years, so making sure you’re covered should be a priority.

Here are a few example quotes of what a 30 year term policy would cost.

30 Year $250,000 Term Policy30 Year Old40 Year Old50 Year Old
MaleSBLI
$18.92/mo
SBLI
$29.36/mo
SBLI
$69.17
FemaleSBLI
$15.66/mo
SBLI
$23.49/mo
SBLI
$50.68/mo

If you are looking for a no exam life insurance policy, here are a few quotes for a 30 year non-medical term policy.

$250,000 30 Year Term Policy30 Year Old40 Year Old50 Year Old
Fidelity Hybrid
Male$24.58/mo$37.19/mo$92.00/mo
Female$20.44/mo$29.58/mo$66.12/mo
Assurity Non-Med
Male $34.76/mo$70.84/mo$170.06/mo
Female$28.38/mo$51.04/mo$110.44/mo

Other methods of calculating how much you need

I use a ten times my income calculation as a guideline in my interest calculation, but being a numbers guy I decided to use a slightly different calculation. I figured that if my wife invested the life insurance proceeds money she should be able to average at least 5% interest off her investments. I then also figured that she would need roughly $100,000 a year to take care of the house and her three boys to help out with raising them and helping them all go to college. To get her $100,000 a year if she divided that by 5%, that equals that we would need $2 million invested, and that is how I came up with how much life insurance that we needed. It is not the only way to calculate how much life insurance you’ll need, but it is something that you could use for your own calculations.

Getting term life insurance for a 30 year old should not be difficult, so don’t make it harder than it needs to be, but if you’re in your 30s and have a young family and you don’t have any life insurance yet, stop procrastinating. Get a free quote today and see how inexpensive it is to make sure that your family is taken care of.

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{ 8 comments… read them below or add one }

Loves2Teach May 10, 2012 at 8:13 pm

Jeff, you’ve got to be kidding. In today’s economy how in the world can someone possibly buy this amount of coverage?

Reply

Jeff Rose May 10, 2012 at 8:21 pm

People do it all the time.

Keep in mind though that every situation is unique. This is the amount of life insurance coverage that I felt I needed for my family. In your case, it might be far less.

If you know you need the coverage, but can’t afford a 30 year term, you could always take the risk of getting a shorter term, say 20 years, so at least you’re covered for that time frame.

Reply

Wilkerson, Stephen May 12, 2012 at 1:17 am

Jeff, my current employer offers coverage up to 3 times my current salary, which is 42,000/year. I want to supplement that, while taking home a decent amount of money after taxes and 401-K deductions. Would your calculation method work for me as a single-father?

Reply

Jeff Rose May 12, 2012 at 6:42 pm

@ Stephen Being a single father would maybe decrease the amount you need, but not too much.

A couple of things to consider:

1. That’s great that your employer offers life insurance coverage, but I would encourage you to go buy it outside of there. Most life insurance that you buy through work doesn’t transfer with you if you ever lose your job. If you buy term life insurance from an independent agent, it will follow you wherever you go and you won’t have to take the risk of your next employer having it and/or you having to pass another medical exam.

2. While you’re not leaving income replacement for your spouse, you still want to leave some around to help pay for school and perhaps give them a solid start to their financial lives. Only you would know how much that might be. You will want to make sure you have a will in order too (perhaps a trust) so that your kids wouldn’t get all the lump sum at one time.

Feel free to bounce any more ideas off me.

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Anon1 May 12, 2012 at 1:19 am

I agree Loves2teach. There’s no way I could pay that much. I’m barely holding on to my medical coverage. Nice concept, but impossible for me…

Reply

Jeff Rose May 12, 2012 at 6:47 pm

@ Anon1 Once again, I’m not advising you to go out and spend $2400 a year on a 2.5$ million 30 year term policy. That’s what I felt my family needed.

Check out this other post http://lifeinsurancebyjeff.com/life-insurance-in-your-30s/ that shows that 30 year old can get a $1 million 30 year term policy for $695 or $57.91 per month.

Even at half that, a $500,000 30 year term policy would cost you less than $30/mo. Point is that most people can’t afford not too. Buying term life insurance should be considered a top priority.

Reply

Felicia Williams May 12, 2012 at 1:41 pm

Agreed. If I had a decent job I could probably swing this. I’m off to bookmark this page for future use…

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Anon1 May 13, 2012 at 12:09 am

Thanks for the response Jeff,

Looking it at it that way, I can see how I could manage a policy. I have a lot to think about and decisions to make.

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