Insurance through the Ages – What Insurance Do You Need Each Stage of Your Life?

Insurance isn't the most thrilling to think about, but it's necessary for protecting yourself, your family, and your wealth.

Accidents, illnesses, and disasters happen all the time. At worst, events like these can plunge you into deep financial ruin if you don't have insurance to fall back on.

Insurance is largely personal, though, and the type of policy or amount of coverage that's right for you and your financial situation usually won't match your friends or relatives. Plus, as your life changes (say, you get a new job or have a baby) so should your coverage.

Below, we've explained briefly which insurance coverage you should strongly consider buying at every stage of life.

Insurance you need in your 20s

Health insurance

Most Americans need insurance to afford healthcare. Choosing the plan that's right for you may take some research, but it serves as your first line of defense against medical debt, one of biggest sources of debt and bankruptcy among consumers in the US.

Some Americans get health insurance through their employer or a spouse's employer. Employees who are eligible for coverage through work usually don't need supplemental health insurance.

You'll stop needing it: Never.

Auto insurance

In 49 of the 50 US states, drivers are required to have liability car insurance to cover any potential property damage and bodily harm that may result from an accident.

The minimum coverage requirements for liability insurance vary by state, but if you finance or lease your car, your lender probably requires comprehensive coverage and collision coverage.

The cost of liability coverage varies depending on your state, as some states require more coverage than others. Your average cost will vary based on the type of vehicle, your location, mileage, and driving record. Some states consider your age, credit, and gender.

You'll stop needing it: When you stop driving a car.

Renters Insurance

Your landlord has insurance that covers the building and structure, but your belongings inside the rental unit are your responsibility. Renters insurance protects renters' personal property from a fire, storm, or theft. It also provides "loss of use" coverage if your rental becomes unlivable due to damage.

You'll stop needing it: When you stop renting.

Disability insurance

Disability insurance is meant to provide income should you be disabled and unable to work due to illness.

If you're relying on a steady paycheck to support yourself or your family, you should have disability insurance. Although many people probably have short-term disability through their employer, long-term disability insurance is the one that most people need and do not have.

You'll stop needing it: Once you exit the working world around age 65, which is often the end of the longest policy you can buy.

Life insurance

Most people aren't thinking about life insurance in their 20s, but it's the best time to buy it because most people's health declines with age. The longer you wait to buy a policy, the greater the eventual cost.

If someone else relies on your income for their financial well-being, then you probably need life insurance. Even if you don't have dependents, there are other reasons to have life insurance: private student loan debt, self-employment, or a family-owned business.

The best life insurance policy for you depends on your budget as well as your financial goals. There are two main types of life insurance policies to choose from permanent life and term life.

Your life insurance needs to change as you age, and you'll need to consider children, marriage, divorce, retirement, and caring for aging parents.

You'll stop needing it: When your dependents are no longer relying on you for financial support.

Insurance you need in your 30s

Homeowners Insurance

Homeowners' insurance is not required by state law. However, if you have a mortgage, your lender will require homeowners insurance to protect the investment.

Homeowners insurance protects the home, your belongings, and offers liability coverage for injuries that happen on your property. There are three components to homeowners insurance: dwelling coverage, personal property coverage, and personal liability coverage.

If the mailman slips and falls on your sidewalk, the dog bites a guest, a tree falls on your roof, or the neighbor's kid injures himself in your swimming pool, homeowners insurance can protect you. Coverage varies depending on the type of homeowners insurance you have based on your house type — single family home, condo, mobile home, townhome, etc.

You'll stop needing it: If you sell your home and go back to renting, or make other living arrangements.

Insurance you need in your 40s

Long-term care insurance

Industry experts say 50 percent of Americans will need some type of long-term care assistance  — at-home care, assisted living, or care in a nursing home —  in their retirement. Medicare only pays for 100 days of long-term care, under certain circumstances, for $100 a day. If there is a shortage or difference, you or your family must pay it. This is where long-term care insurance or a hybrid policy comes into play.

For people who are aging or disabled and need help with daily living, whether in a nursing home or through hospice, long-term care insurance can help shoulder the exorbitant costs.

Long-term care is expensive. However, most Americans will need long-term care at some point during their retirement. It's cheaper to get long-term care insurance while you're relatively young and healthy, so you should be considering long-term care insurance in your 40s.

This is only a general guideline based on age and time and life circumstances. If you have questions and would like to get a better idea of which insurance is right for you - at any age - please contact us and we'll be happy to talk you through it.