What Is the Best Time To Buy Life Insurance?
You may have been offered life insurance through your employer, or have heard such policies come up in conversation with older relatives or even on TV. The truth is that life insurance does provide a safety net for your loved ones to cover expenses upon your passing, and it is worth considering at any stage of life.
To understand when the right time to buy life insurance coverage may be, it’s best to understand the types of coverage that are available to you, as well as evaluate your physical, financial, and personal lives.
Your Life and Life Insurance
A younger person may shrug off the idea of a life insurance policy, assuming it’s just meant for older family members or someone they know who has a chronic medical condition. The reality is the younger you are, the better. At a younger age, you’ll qualify for lower premiums. Age is factored into account by life insurance companies when determining premiums. Buying a policy when you’re older also puts you at risk of coming into issues with your health that can actually disqualify people from insurance plans.
However, younger people opt against life insurance policies since they have things like student loans and credit card debt that they are already paying down. While getting rid of those debts is important, missing out on buying an insurance policy at a young age has a significant financial impact long-term. Experts suggest even looking into a cheaper policy temporarily that won’t hurt your monthly bottom, but leave you and your loved ones with some peace of mind.
When to Buy Term Life Insurance
Term life insurance guarantees payment of a death benefit if the covered person dies during a specified term. If that time period expires during a term life insurance policy, the insured can renew for another term. They can also convert the policy to permanent coverage with that insurer, or let the policy expire altogether. This type of life insurance is often considered by young families just starting up to provide a safety net for their children as they grow up.
Couples who own property together may want to be covered under a life insurance policy until their mortgage is paid off. For greater financial protection, they may both want to pursue their own policies. Life insurance is considered prudent beyond just critical illness and age, as these plans can cover not only funeral costs but any outstanding debts left behind upon the death of the policyholder.
When to Buy Permanent Life Insurance
Permanent life insurance is just what it says, a policy that does not expire. These plans are typically broken down into two primary types: whole life and universal life.
A whole life insurance policy offers coverage for the full lifetime of the insured, with additional savings that can grow at a guaranteed rate. Under this form of permanent life insurance, the cash value grows tax-deferred. Premium contributions to whole life policies purchased at an early age can accumulate considerably over time. The cash value is sometimes used as a supplement to retirement income.
Universal life insurance also offers a savings element along with the death benefit, but it can come with different types of structures for insurance premiums. Policyholders are able to adjust their premiums and death benefits, providing more flexibility than whole life insurance. The policy’s death benefit can be paid off with accrued cash value covering the overall cost of insurance.
While there are multiple options when it comes to life insurance and the insurance companies offering these plans, it is best to take into account having that safety net as soon as possible, but do so on your personal and financial terms.