In Your 30s with Kids? You Need Life Insurance

When you're a 30-something with a spouse and children, it's easy to switch on your tunnel vision and focus only on what's in front of you. But what about the unpredictable events that could derail your family's future?

It's important to find a way to replace your income, which is exactly the purpose of carrying life insurance. Still, fewer than half of Americans actually have private life insurance coverage not from an employer, according to the insurance research and consulting firm LIMRA.

About 70 percent of consumers blame living expenses for keeping them from purchasing any or more life insurance coverage, LIMRA says. But that's a problematic way of thinking, says Steven Weisbart, senior vice president and chief economist for the trade group Insurance Information Institute.

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"You would want to protect (your income) a little better than just hoping nothing bad happens," Weisbart says.

Excuses, excuses

Some other reasons people dismiss the need for life insurance include "I'm busy now -- I'll get to it later," "It's too complicated" and "I don't know anyone who died at my age," says Glenn Daily, a fee-only insurance adviser in New York City.

People find it difficult to think about their own mortality, says Jack Dolan, a spokesman for the American Council of Life Insurers, a trade group.

"When you're in your 30s, you think you're invincible," he says. "People don't think that (death) can happen to them."

But, as we all are aware, life is uncertain and we don't know when we'll pass away. This underscores the need for breadwinners in their 30s with a family to carry life insurance, he adds. "It helps manage life's risks."

Not as expensive as you think

Dolan says life insurance is part of the foundation of financial security, along with a bank account and rainy-day fund.

"(Life insurance) is something that any responsible individual should consider in order to protect their loved ones," Dolan says.

People tend to overestimate the cost of life insurance coverage. According to data from LIMRA, consumers believe life insurance costs nearly three times its actual price tag.

"Most of them probably have never actually priced it," Weisbart says.

For the 30-somethings who say there isn't room in the family budget for life insurance, Dolan has a question for you: "How can you not afford it?"

"How will your family afford things if they don't have the financial resources that they need?" he asks.

Less than $50 a month

If you're a 30-something parent and are wondering which type of life insurance policy would be best for your family, consider term life insurance, says Tony Steuer, an insurance literacy advocate and author of "Questions and Answers on Life Insurance."

"If you're in your 30s and in good health, it's really, really inexpensive."

For example, he says it's possible for a 35-year-old man to get a $1 million, 20-year term policy for $47 a month.

It costs even less for a woman the same age: $44 per month, Steuer says. Again, that would provide her loved ones with $1 million if she were to die.

Consider buying a term policy that is "convertible to cash-value life insurance for many years," advises Daily. A cash-value policy, also known as permanent life insurance, builds up savings during your lifetime. But permanent policies are more expensive than term insurance, and you'll probably want to avoid the higher premiums in your younger years.

Carve out a place in your budget

Finding the funds to purchase life insurance is all about proper budgeting and planning, Steuer says.

"If you do have a family or somebody who's financially dependent upon you, then life insurance does become a necessary expense."

When you're in your 30s with loved ones to care for, keeping life insurance premiums out of your budget might seem like an easy decision, especially with all your family's regular living expenses, but the coverage provides you with a way to manage a serious financial risk.

It's about "recognizing your role as an income producer," Dolan says.

Insuring a stay-at-home spouse

If you have a stay-at-home spouse, don't forget to factor in his or her contribution to the household and what would be lost if he or she were to pass away.

"(The at-home spouse) provides tremendous value," Steuer says. "We know how expensive and time-consuming taking care of kids can be."

As uncomfortable as thinking about your death may seem, it's gravely important to concentrate on what you and your family would lose without life insurance, Weisbart says.

"Once you put life insurance -- for a reasonable amount of death benefit -- in place, you can forget about it and go on and do other things."