Who needs life insurance? Exploring different life stages and coverage options
Life changes over time, and your life insurance needs may change too. If you're about to get married or are in the middle of raising children, your coverage needs could be quite different than if you are paying off your home or preparing for retirement. Understanding the basics of term life insurance and whole life insurance may help you feel more informed as you explore coverage options.
What is term life insurance?
Term life insurance is designed to provide coverage for a specific period of time, often 10, 20 or 30 years. A term life policy may appeal to people who want coverage during years when financial responsibilities are higher, such as when they’re raising children or paying a mortgage.
Because the coverage lasts for a set term, the monthly payments — or premiums — are generally lower than permanent coverage options. If the insured person passes away during the policy term, the beneficiaries may receive a life insurance payout that could help with expenses like housing costs, childcare or daily living needs.
What is whole life insurance?
Whole life insurance is a type of permanent coverage designed to last a lifetime as long as premiums are paid. A whole life policy may also build cash value over time, which is one feature that makes it different from term coverage.
Because it offers lifelong protection and additional features, premiums are typically higher than a term life policy. Some people may consider this type of life insurance policy if they are thinking about long-term goals such as estate planning, leaving money to loved ones or helping to cover final expenses.
Different life stages mean different coverage needs
Beyond textbook definitions, examples of different lifestyles may help in identifying what type of coverage could align with differing needs. The examples below are created to show how different people may approach coverage based on their goals, responsibilities and stages of life.
These are hypothetical examples used for illustrative purposes only.
Michelle: A 45-year-old mom raising two children
Michelle works full time, is healthy and spends much of her income supporting her family. Between childcare, household expenses and planning for her kids’ eventual college education, she wants to feel prepared in case something happens to her.
Michelle’s choice coverage
As a parent, Michelle may consider term life insurance because it could provide coverage during the years her children still rely on her financially. A 20-year term life policy may align with her long-term responsibilities while helping keep costs manageable. Michelle’s coverage goals could include helping cover:
- Mortgage payments
- Childcare expenses
- Everyday household costs
- Future education expenses
In Michelle’s case, a $150,000 life insurance policy may provide a level of protection that supports her family during an important stage of life.
People wondering who should get life insurance might think about whether others depend on their income. Parents with young children are one example of people who may explore coverage options.
Leo: A healthy 35-year-old divorced dad
Leo is focused on creating stability for his son. Between monthly bills, student loans and planning for the future, he wants reassurance that his child could still have financial support if something happened to him.
Leo’s choice coverage
Leo might look at a 30-year term life insurance option because it could help provide longer coverage during his son’s younger years and into adulthood.
His coverage priorities may include:
- Student loan payments
- Childcare costs
- Mortgage or car loan balances
- Future college expenses
For Leo, a $250,000 life insurance payout could help provide financial support for his child if the unexpected happened.
When people ask who needs life insurance, parents and caregivers are often part of that conversation because loved ones may rely on them financially.
Ada: A 60-year-old homeowner preparing for retirement
Ada is semiretired and beginning to reassess her financial priorities. Her children are independent, and her focus has shifted toward staying healthy, planning ahead and thinking about what she may leave behind for her family.
Ada’s choice coverage
Because her goals are changing, Ada may explore whole life insurance. A whole life policy could offer permanent coverage that aligns with long-term planning goals.
Ada may want coverage that could help with:
- Final expenses
- Estate planning considerations
- Leaving money to children or grandchildren
- Long-term wealth transfer goals
For someone like Ada, a $30,000 whole life insurance policy may be intended to help with end-of-life expenses or legacy planning rather than income replacement.
People sometimes assume that coverage is only for younger adults or parents. But some older adults may also choose to review existing coverage as retirement approaches.
Term life vs. whole life insurance
| Cost | Length of coverage | Cash value | Common goals | |
| Term | Generally lower premiums | Specific term | None | Shorter-term coverage |
| Whole | Generally higher premiums | Lifetime | May build over time | Long-term/permanent |
Choosing the right amount of coverage
There is no single answer for how much life insurance a person may need. Coverage amounts often depend on personal goals, financial responsibilities and family needs.
Some people consider:
- Income replacement needs
- Outstanding debt
- Mortgage balances
- Children’s future expenses
- End-of-life costs
- Long-term financial goals
The examples above show how coverage priorities may look different depending on life stage and responsibilities. Michelle focused on raising children. Leo thought about supporting his son long term. Ada looked toward retirement and legacy planning.
Because every situation is different, many people review their finances, goals and family needs when exploring a life insurance policy. TruStage® can help you explore your options a little further to better understand how different types of coverage are designed to support different needs.
