Life Insurance by Generation

People at different stages of life have different priorities and needs. That’s why it makes sense to get life insurance coverage that’s tailor-made for your situation rather than seeking a one-size-fits-all answer.

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Life insurance can be an essential part of financial and legacy planning, and your age, family, finances and personal goals are all important factors when it comes to deciding what coverage is right for you. After all, there are different types of life insurance with different features and costs, and some are more suited to certain situations than others. Whether you’re young and single, married with a family, or an empty nester looking forward to (or already enjoying) retirement, there are options that can help you protect the ones you love. And while no two people have the same life insurance needs, here’s a look at how the different choices fit different generations of Americans. 

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Life insurance needs for baby boomers (born 1946–1964)

For some Americans, financial peace of mind is a critical part of an enjoyable retirement. People are living longer than ever before, and that increased life expectancy can mean there is a need for their retirement savings to last longer.

Baby boomers who are still working may want to consider ways to protect and grow their upcoming retirement plans, and to help protect their loved ones. One option is permanent life (also referred to as whole life or cash value life insurance). Most permanent life insurance policies accumulate cash value in a way that’s sort of like the way a home builds equity as you pay the mortgage. As long as you pay the premiums on time, a portion will go to the cash value.

The cash value can be borrowed from in the future to help pay for things such as home improvements or to help supplement your retirement income. (Just be sure to repay any withdrawals from your policy so that the death benefit is not reduced.) Permanent life insurance policies can help provide coverage for your lifetime and build cash value to use in the future.

Baby boomers who are retired may be thinking about health issues, final expenses, leaving a legacy or making sure their savings will last long enough. There are permanent life insurance policies available to older adults that can help lighten the burden of these issues for a surviving spouse or family members. For example, a universal life insurance policy is highly customizable and can provide a lifetime of coverage with flexible premiums and benefits to help meet your specific needs. A policy can be designed to help increase the inheritance you leave to beneficiaries and help ensure that your legacy is preserved.

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Life insurance needs for Gen X (born 1965–1980)

Many Gen Xers can have a mix of financial obligations that life insurance can help pay for. Some of those obligations (like final funeral, medical and legal expenses) can be significant, but there can be daily living expenses (home loans, utility and grocery bills, for example) that also need to be paid. A 2022 study from the Life Insurance Marketing and Research Association (LIMRA) indicated that 49% of Gen Xers reported financial insecurity—higher than any other generation.

If you have family members who rely on you now, your life insurance could help them carry on financially after you’re gone. It’s a way to help care for those you love, whether they’re your spouse and children or members of your extended family, such as grandchildren. Life insurance benefits could provide them with essential health care, or it might allow them to stay in their home. It could even help the next generation of your family get a college education.

While you are in your income-earning years, a universal life insurance policy can provide lifetime coverage while allowing you to build cash value, tax-deferred. You could use the funds to help supplement your retirement income and depending on your policy terms, you may not have to be 59 ½ years old to use the money. These withdrawals, however, can reduce any death benefits received by beneficiaries.

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Life insurance needs for millennials (born 1981–1996)

One reason millennials should consider life insurance: They are likely to have debt. An overwhelming 73% of U.S. millennials were living paycheck to paycheck in the spring of 2023 as they dealt with mortgage bills, auto loans, credit card payments and other expenses.

Not all millennials are income earners. Individuals such as stay-at-home parents provide a valuable contribution to a household, even though they may not be earning a paycheck. Their contributions should be factored into any life insurance decisions. A surviving spouse may need to pay for services like child care and housekeeping that were previously performed without financial compensation.

Term life insurance is an option as it provides protection for a specific period of time, called the term length—typically 10 to 30 years—and term life insurance rates are also usually less expensive. The cost of term life insurance can make sense when you have a financial obligation such as paying for your dependents’ college tuition or paying off a mortgage.

Depending on the terms of your policy, you may be able to add a return of premium rider at an additional cost to your term life insurance policy, this rider may allow you to receive a return of all your premium payments at the end of the term period as long as your premiums have been paid on time and the policy hasn’t lapsed.

For coverage after the term, choices may include getting a new term policy; getting a combination of term and permanent insurance; possibly extending coverage past its expiration date on a year-to-year basis; or, depending on the term policy you have now, possibly converting it to permanent life insurance.

AAA Life Insurance Company 10-year term policies do not allow for a return of premium.

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Life insurance needs for Gen Z (born 1997–2013)

According to the 2023 Insurance Barometer Study conducted by industry research groups LIMRA and Life Happens, 44% of Gen Z adults said they intend to purchase life insurance within the next year.

There are many scenarios that make life insurance a good idea for people who are young and single, even if they don’t yet have financial dependents. You may have older parents who depend on you for their care (or who will in the future). You may want to leave funds for family members, such as nieces or nephews, or even make a financial contribution to an alma mater or a charity you care about. Conversely, you probably don’t want to leave them with any debts or loans (such as cars or education) for which they could end up being responsible.

And life insurance policies can provide value other than a death benefit. Universal life insurance, for example, offers the option to build up cash value that can be used toward business opportunities or to supplement retirement income.

Life insurance rates can be lowest when you’re in good health, so even if you’re not making a lot of money yet, you’ll probably be able to fit life insurance into your budget. If you’re young, now may be the best time to buy a policy—so you’ll be covered when it’s time for marriage, kids or other responsibilities.

Take the time to find out what kind of life insurance is right for you. Your future self will thank you!

AAA makes life insurance simple.

No matter your age, life insurance can be a valuable part of your family’s financial security. And while getting coverage and ensuring that it continues to meet your needs may feel overwhelming, it doesn’t have to be. One of the best ways to know the kind and amount of coverage that’s best for you is to meet with a life insurance specialist for a needs analysis. This quick and simple conversation uses easy-to-answer questions that will help give you and your insurance agent a clear picture of the type of policy and amount of coverage that’s right for you. Since your life is constantly changing, you may want to do these updates annually (or whenever life presents you with a major milestone) so that your coverage keeps up with your needs.

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Life insurance underwritten and annuities offered by our affiliate AAA Life Insurance Company, Livonia, MI. AAA Life (CA Certificate of Authority #07861) is licensed in all states except NY. Products and their features may not be available in all states. 

Please consult your professional advisor prior to the purchase of any policy or contract.



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