How Long Should Your Cover Last?

Insure the need while it lasts — and let the cover end when the need does. (Matching term to need.)

A common question is whether life cover should run for 20 years, 30 years, or for life. The honest answer is: as long as the need lasts — no longer. And for most households, the need is not constant. It is largest in the middle years and falls steadily toward retirement.

The reason is simple arithmetic. Early on, the mortgage is large, the children are young, and many years of income still need protecting. Each passing year shrinks all three — the loan is paid down, the children grow up and earn, and your own savings build. By retirement, with the house paid off and dependants independent, the need for income-replacement cover is often small.

That shape has a practical consequence. Paying for a large, level amount of cover for life can mean insuring a need that has largely disappeared. Matching the cover to the falling need is usually cheaper and just as safe.

This is exactly why term insurance — and the laddering technique covered next — fits most people: you hold the most cover when the need peaks, and let it taper as the need recedes.

Illustrative example: the need falls over time

The line shows a typical protection need from your thirties to retirement. It starts high and declines as debts shrink, children grow, and savings build. Your cover should follow roughly the same path — not stay flat long after the need has gone.