The Insurance Life Cycle of Americans

secure Editorial Standards

SmartFinancial Offers Unbiased, Fact-based Information. Our fact-checked articles are intended to educate insurance shoppers so they can make the right buying decisions. Learn More

From the cradle to the grave, we need insurance products to keep our lives in balance and to have financial help when the unexpected occurs. Even babies need various types of insurance in ideal situations and so do seniors. Let’s take a look at the timeline of the insurance life cycle of Americans so you can see which insurance products you’ll need in the course of a lifetime.

Key Takeaways

  • You need insurance at every life stage, even as a baby.
  • You will not be turned away for an existing condition and should have health insurance until you're eligible for Medicare.
  • Your insurance needs will change at different stages in your life and should shop for a new policy every six months to get the best rate.

insurance life cycle of Americans infographics

Insuring Babies

If we are lucky, our parents buy us life insurance as soon as we’re born. Ideally, the policy is a whole or permanent life policy with a savings component. As long as parents make the monthly premium payments, the life insurance policy is active and accruing value in the form of a savings account. This account can help the baby later on in life, to pay for college, to start a business or to place a down payment on a first home.

It’s easy these days to buy health insurance for a child too, either by adding them to a workplace health insurance plan or buying a private health insurance plan. A child can be covered by both parents’ health insurance policies, if you and your partner do not share a plan. In this situation, one policy would be the primary plan and the other a secondary one. Either one or both can be a private health plan as well. It’s important each year to try and renew or shop around for a better plan during the Open Enrollment Period. Otherwise, you’ll have to wait for a Special Enrollment, which includes the birth of a child. You may even qualify for a plan with a state subsidy, which lowers the price you pay.

Insurance Type

Suggested Coverages

Life Insurance

Permanent life insurance

Health Insurance

Parents’ private health insurance, employer health insurance or Medicaid/Chip

Insuring Teenagers

Before you know it, babies grow up to be teenagers, and teenagers want to drive. Unfortunately, new drivers of a young age pay astronomical prices for auto insurance, especially teenage boys. You have options to save money insuring a teen. You may want to put them on your car insurance policy, if they have a car, or you may opt to buy a non-owners car insurance policy so that teenager’s insurance rate drops even more dramatically when they enter their 20s. You will also get a discount if your insured teen goes off to college and doesn’t take their car with them. It’s never a good idea to cancel the policy altogether. A lapse in car insurance, even when you don’t drive in that period of time, will increase your rate when you insure a car in the future. A good student discount, usually a B grade point average or higher, is also helpful in lowering car insurance rates.

When your teen goes off to college, they may elect to live in an apartment instead of living in a dorm room. You’ll need renters insurance, in case the apartment is burglarized or if a covered event destroys all their belongings and school supplies. Even when renters insurance is not required by the landlord, it’s a wise investment and doesn’t cost very much. The off-premises portion of the renters insurance will also cover items stolen while away from home, including bicycles and even possessions stolen out of a car. Car insurance will not cover stolen property.

The great thing about the Affordable Care Act is that a teen, even a young adult up to the age of 26, can remain on their parents’ health insurance plan(s). At age 26, however, they should look into buying a health plan of their own.

Insurance Type

Suggested Coverages

Car Insurance

Non-owners policy or full coverage on parents’ plan (cheapest options). Collision and comprehensive coverages are good to have.

Renters Insurance

Protect valuables, electronics and school supplies if the student lives off campus.

Health Insurance

Add a child to your health insurance policy until age 26 (cheapest option).

Insuring Young Adults

Young adults must buy their own health insurance when they turn 26, and they most often rent their homes and need renters insurance to protect their personal belongings in case of damage or other type of loss. They may be new to a career or perhaps they started their own business. Having the right commercial insurance for that business will be very important, whether they have employees or not. If someone gets hurt or their property is damaged while on the business property, commercial property insurance and personal liability insurance will cover these types of incidents. Workers compensation is required, even if the business owner employs only one person. Most business owners have general liability coverage at the very least. Protecting your business is important for longevity. One financial blow can shut down a business for good!

Insurance Type

Suggested Coverages

Health Insurance

You’ll need your own health insurance plan, either privately or through an employer.

Renters Insurance

You’ll want to cover your belongings, at home and away from home.

Commercial Insurance

If you start a business, don’t forget to insure it!

Insuring Adults

Many American adults go on to buy a home, even two or perhaps an investment property that they rent out. If you take out a home mortgage, you’ll need reliable homeowners insurance and landlord insurance if you have renters living on your property. You may decide to rent an apartment to have fewer headaches, however. Still, buy renters insurance to cover your prized possessions.

Car insurance will be steadily going down, if you’re avoiding accidents and citations, and you’ll earn a discount for being a homeowner. You may even qualify for a multi-car policy, which also applies if you marry (another big discount for getting hitched, too!).

If you’re planning on having children, it’s important to buy health insurance and a life insurance policy for yourself and your spouse, even if one of you is a stay-at-home caretaker. Consider buying a life insurance policy for your children too, as soon as possible. As you may know, life insurance only becomes more expensive as you age. The same goes for children. You’ll have options, like term life insurance, which is the least expensive type of life insurance. Or, if you want a savings or investment component to your policy there are other types to choose from.

As your business grows, you’ll want to revisit your commercial insurance policy or policies to make sure you’re covering all the bases, which may have multiplied! Reviewing all your insurance policies and comparison shopping for a lower price are all a good idea, at least once a year.

Insurance Type

Suggested Coverages

Homeowners Insurance

If you own a home, insure it and your things.

Renters Insurance

If you rent a home, insure your things.

Car Insurance

Buy state minimum and add collision and comprehensive if it’s worth more than a few thousand dollars.

Health Insurance

Have coverage privately or through an employer.

Life Insurance

Make sure those you love have a safety net if you pass away.

Commercial Insurance

A business needs protection to keep growing.

Insuring Seniors

Seniors may still lead active lifestyles and even hold down a job well into their 60s, sometimes 70s. However, it’s important to apply for Medicare as soon as you’re eligible or else you’ll have to pay a higher rate for part B for the life of your membership. In fact, many seniors benefit from switching to part C, Medicare Advantage, which combines Parts A and B and offers benefits like vision, dental and hearing. Your plan may also include Part D for prescription drugs.

Until you’re eligible for Medicare it’s important to have a higher tier health insurance plan if you have a chronic condition. If you’re healthy, it’s still wise to opt for a silver-tier plan at the very least.

Life insurance becomes even more important as we age and think about the future of our loved ones after we pass. If you have a term life insurance policy that expired, it may be time to think about buying a new one or buying one with cash value so you can leave behind a cash benefit to your beneficiary or beneficiaries.

If the business you started has taken off and is now a family business, make sure someone is staying on top of insuring that business with the right commercial insurance products. This is not an area where you want to save money, except when it comes to comparison-shopping different insurers.

Your car insurance may go up too, around age 70, so make sure to tell your insurance agent if you drive infrequently. Even if you’ve paid off your mortgage, it’s a good idea to have homeowners insurance, so see if you can get a good rate by bundling home and auto. If you sold your home and live in a rental, don’t overlook renters insurance, which can also be bundled with car insurance for a discount.

Insurance Type

Suggested Coverages

Medicare Advantage

If you qualify for Medicare consider MA, which offers more comprehensive coverage that includes prescription drugs, vision and hearing.

Health Insurance

Until you qualify for Medicare, it’s important that you stay covered. You may qualify for a subsidized ACA plan depending on income.

Life Insurance

It gets more expensive each year to buy a new life insurance plan. See if it makes financial sense to buy life insurance later in life.

Commercial Insurance

If the business you started is now a family legacy, make sure you’ve got adequate coverage, perhaps a BOP policy that bundles common coverages businesses need.

Car Insurance

You drive less, so make sure you have a low-mileage plan.

Homeowners Insurance

The mortgage is paid off so it’s not required anymore, but if you own a home, you should carry homeowners insurance.

Renters Insurance

If you sold your home and are renting, don’t forget to protect your personal possessions in and outside your rented home!

If you’re looking to lower your insurance rates, you can shop around for a better deal by entering your zip code on this page. The service is free and there is no obligation to buy or put down a credit card. See who will offer you the lowest price today!

Get a Free Insurance Quote Online Now.