Ranked: The Best Life Insurance Policies for Different Life Stages

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Adults of all ages need life insurance. See which types of life insurance are best for young adults, new parents, and mid-career professionals. 

Buying life insurance is a rite of passage for many first-time parents. Protecting your young family and providing for your children in case of your untimely demise is top of mind for many moms and dads, especially for single parents and sole breadwinners.

But life insurance isn’t just for new parents. Many people need life insurance, and it can be a useful part of your financial plan at many stages of life.

Here are a few of the best life insurance policies that you might want to consider, depending on your age, life situation, and financial goals.

Best life insurance for young adults: Term life insurance

If you’re a young, single adult in your early 20s with no kids, you might wonder if you really need life insurance. The answer: maybe! Ask yourself:

Is anyone helping pay your debts? In case of your death, term life insurance can help pay them off.Would you like to help take care of your parents in case of your death? Term life insurance can provide cash to your parents or other loved ones, even if they’re not your children or other dependents.Do you have a favorite niece, nephew, or friend that you’d like to provide for in case you die? Term life insurance can help take care of other people in your life, even if they’re not your child, or even if they’re not related.Do you want to have a spouse or kids in the future? Even if you haven’t married or had kids, getting term life insurance while you’re young can help lock in an affordable premium.

Why term life insurance is the best choice: It’s typically the cheapest life insurance you can get — it offers the largest amount of coverage (death benefit) for the lowest monthly premium. And if you’re generally in good health, as a young person in your 20s, you can get cheap rates on term life insurance. For example, if you’re 25 years old and a non-smoker, you could get $500,000 of term life insurance coverage from the best life insurance companies for less than $20 per month, depending on the length of the term.

Best life insurance for new parents: Term life insurance

Are you welcoming a new baby into your life? Congratulations! But also: condolences to your bank account. Kids are totally worth the effort, but they are expensive; it takes an average of $300,000 to raise a child from birth to age 17.

Buying life insurance for your family can be a great way to protect your loved ones in case of your death. Whether you’re a single parent, sole breadwinner, or stay-at-home full-time caregiver, you need life insurance to take care of the people who depend on you, and replace the resources they’d lose in case you were gone.

Why term life insurance is the best choice: It’s affordable for young parents on a budget, and you can choose a term that suits the length of your children’s childhood. For example, you could get a 20-year term life insurance policy to cover you through your child’s high school graduation, or a 30-year term policy if you have multiple children with a larger age gap.

Also, ask at work if you can join a group life insurance plan. Some employers offer free or low-cost group life insurance as part of a financial wellness benefits package. It might not give you enough coverage, though — some companies’ free group life insurance policy might only have $25,000 to $50,000 of coverage. Consider buying your own term life policy along with any free policy you can get at work.

Best life insurance for busy midlife career people: Universal life insurance

Let’s say you’re in your mid-40s. You’ve got a family, a home, and a successful career. You’re making good money and you’ve got retirement savings. Now is a good occasion to re-evaluate your life insurance. Ask yourself:

Is the term life insurance policy that you bought 15 years ago when your first child was born still the right fit?Do you have enough life insurance coverage to replace your (higher) income?Has your family’s mortgage gotten bigger since you first bought life insurance?Are you saving money for your kids’ college fund? What happens to their 529 accounts if you die?

For all these reasons, you might need more life insurance at midlife than you did in your 20s. Your family’s expenses might have gone up, your income has hopefully gone up — you need life insurance to pay for bigger bills and replace a stronger cash flow.

Why universal life insurance is the best choice: You could also buy more term life insurance! But if you are financially comfortable and you want to protect your loved ones while investing for the future, universal life insurance could be worth the higher premium costs. Universal life insurance can offer you more flexibility and intriguing financial upside than a simple term life policy.

Universal life insurance costs more than term, but it lets you build cash value, or invest in securities, as part of your life insurance policy. It’s also flexible, letting you change the premium amount, change the death benefit, or stop paying premiums for a while (if you have enough cash value built up). Universal life insurance is not for everyone, but it offers some useful features that could make it a good fit for your personal finances.

Bottom line: Term life insurance is a good choice for most situations. But if you can afford a higher premium and you want your life insurance policy to gain cash value, offer flexibility, and give you investment options to grow your savings, universal life insurance could offer higher return on investment.

Our picks for best life insurance companies

Life insurance is essential if you have people depending on you. We’ve combed through the options and developed a best-in-class list for life insurance coverage. This guide will help you find the best life insurance companies and the right type of policy for your needs. Read our free review today.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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