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When is the Right Time to Buy Life Insurance?

Life insurance is a vital asset in helping you and your family, but when is the right time to purchase a policy?

Life insurance – it isn’t always the liveliest topic but it’s definitely a necessary one when planning for the future. A life insurance policy is a vital asset in helping protect your family for the long term, whereas it confirms your loved ones will receive financial benefits following your death.

No one really wants to think about their death, but the last thing you’d want is to not have the proper coverage in the event that disaster strikes. So when is the right time to buy life insurance? We’re walking you through what life insurance does and how investing in it sooner will help you plan for a positive future.

What is life insurance?

As we mentioned from the get-go, life insurance provides money to your beneficiaries following your death. There are three main types of life insurance: term, universal, and whole life. The chosen policy typically depends on the needs and goals of the owner.

  • Term life insurance
    • Provides financial protection for a specific period of time
    • Ensures the family's financial goals will still be met (such as paying off mortgage)
    • Generally less expensive due to come constraints of coverage for beneficiaries
  • Universal life insurance
    • Provides lifetime coverage
    • Most often used as to replace long-term income
    • Flexible: may allow change in premium payment amounts throughout lifetime
      • Can also change the length of coverage
    • Higher premium payments than term
  • Whole life insurance
    • Provides lifetime coverage
    • Can be used as an estate planning tool to help preserve wealth
    • Premium payments are most likely fixed

Now you know the differences between policies. But how will you know when to take the leap? Consider these factors when purchasing a life insurance policy:

Your health comes first

When it comes to setting life insurance policy rates, your overall health is the leading determinant.

It goes without saying that the older we get, the more prone we are to serious health issues. But even the conditions we consider to be minor may play a part in our insurance policy.

For example, high cholesterol and weight gain are common factors in raising policy rates. Therefore, it would benefit you monetarily to invest in a life insurance policy when you are younger and generally in better health.

The clock is always ticking

Second in line to your health, your age plays a part in your policy rate. We recommended getting life insurance as soon as you can to avoid raising rates.

We’ll put it this way: the average cost of a 30-year term policy with a $100,000 face amount is about $156/year for a 30-year-old male. Wait 10 years, and the annual premium for a 40-year-old male is about $216/year. The overall cost of delaying purchase for a decade clocks in at $1,800.

However, that doesn’t mean you don’t have other financial obligations to worry about. While the optimal age to purchase life insurance is under 35, millennials are the least likely to purchase a policy nowadays, due to low income rates, student loan debt, and other financial obligations.

Determine your situation

A 30-year policy makes sense when you’re younger, but is probably excessive if you’re later on in life. If you do wait to buy a policy, you can probably opt for a shorter term.
The coverage amount you decide on will affect your premiums. Take inventory of what needs coverage:

  • A mortgage?
  • Student loans?
  • Retirement savings?

If you’re buying a policy later in life and you know you’re already in good shape in certain areas, you can save by scaling back your coverage terms.

When is the right time to buy life insurance? That depends on factors such as your financial situation and coverage needs. But remember that premiums only grow with age and ailing health. If you can afford it, it doesn’t hurt to purchase life insurance in your younger years – even years before you may need to put the policy to use. Contact ProStar Insurance to learn more about our products and policies, and to start the process today.

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