Whether your life is progressing as you intended -- perhaps you own a house and have a family of your own -- or taking an unexpected turn, life insurance is a valuable safety net.
A survey by Northwestern Mutual shows how motivations for buying life insurance change over time.
The survey, conducted in August 2012 among nearly 2,100 adults, found that among the 18-to-34 age group, 28 percent say the birth of a child is the primary reason they look seriously at life insurance policies.
Thirty-five percent of the people in this age group say they'll have more peace of mind knowing that their life insurance will pay off their debts if they die. Twenty-seven percent are likely to consider family education expenses when figuring out how much insurance they need.
"Young people focus on building wealth and paying down debt," says David Simbro, a senior vice president at Northwestern Mutual. “Those heading into retirement are concerned with managing their longevity risk. Life insurance can be a stable yet flexible cornerstone of a financial plan, protection if you need it while also helping you meet financial goals at various life stages."
Traditionally, life insurance is purchased at life milestones like marriages, births or buying a home. Life insurance benefits can pay for mortgage costs, school tuition and other expenses. (See: "Understanding life insurance table ratings.")
These life insurance basics provide an overview of policy choices.
"For younger people, it's about income replacement," says Byron Udell, CEO of AccuQuote.com. "The coverage when you're younger is not expensive and it covers the family economically, should the primary wage earner die unexpectedly."
For older groups, the policies offered by life insurance companies generally are considered “peace of mind" purchases, with the survey showing that 34 percent of 35- to 44-year-olds and 36 percent of 45- to 54-year-olds feel the greatest benefit of their policy is that their families are protected.
Divorces, deaths, blended families, and the need to care for aging parents are all factors that can affect your need for life insurance. It's hard to find families in which the financial plans of 30 years ago have stayed on track. (See: "Why life insurance is key in financial planning for special needs children.")
The survey showed that as people near their retirement years they begin thinking of how life insurance products could benefit themselves and their heirs. About 40 percent of those in the 45- to 54-year-old category factor in paying off their mortgage when considering their life insurance needs. (See: "Baby boomer trend: asset-based long-term care insurance.")
The majority of respondents age 55 and older say they purchase life insurance so their loved ones can have a secure retirement.
Even among the wealthy, life insurance is considered important, says Udell.
"With estate tax laws so unstable, many people are taking a fresh look at life insurance as a way to preserve an estate," he says. "Rather than lose 50 percent of an estate in taxes, you can buy life insurance to keep the estate intact so that your heirs don't lose what you're trying to give them."
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