When Should You Get Life Insurance?

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Updated: May 22, 2024

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Life insurance offers financial stability and protection for your loved ones after you pass away, making it a significant aspect of a robust financial plan. However, it's important to determine the best time to buy life insurance to ensure maximum benefits.

Generally, the ideal time to purchase coverage depends on your personal circumstances, financial situation and future goals. Understanding different life stages that may trigger the need for coverage, the benefits of life insurance at a young age, the cost of waiting to obtain coverage and the types of life insurance policies suitable for different stages of life can help you make a well-informed decision.

Life Events That Could Trigger the Need for Life Insurance

Certain life events may indicate the best time to buy life insurance to ensure financial security for your dependents. Understanding these events can guide your decision.

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    Starting a Family

    Becoming a parent significantly increases your financial responsibilities. Life insurance can ensure your children and co-parent are financially secure if something were to happen to you, covering costs from daily living expenses to future college tuition.

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    Getting Married

    When you have a spouse who depends on your income, life insurance can replace lost income, allowing your spouse to manage ongoing expenses and financial commitments without undue stress.

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    If you've taken on a mortgage, life insurance can help ensure that your family won't struggle with mortgage payments if you're no longer around.

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    Starting a Business

    Business owners often need life insurance. It can be part of a business succession plan, ensuring the business's continuity or being used to cover business loans, preventing the business from falling into debt.

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    Significant Debt

    If you have substantial debts, life insurance can prevent those debts from becoming a burden to your loved ones, relieving them from the obligation of repaying your personal loans or credit card debts.

Best Age to Get Life Insurance

When determining the best age to get life insurance, take into consideration various factors such as financial responsibilities, health, family needs and long-term goals.

As a Young Adult

Getting life insurance in your 20s and 30s might seem premature, but it can be a strategic financial move. Here's a look at the pros and cons of purchasing coverage at this age:

  • Lower Premiums: Younger individuals generally enjoy lower premiums due to better health.
  • Long-Term Planning: Starting early allows for long-term financial planning and security.
  • Flexibility: Young adults often have fewer financial obligations, allowing for more flexible coverage options.
  • Potential Overbuying: Because young adults tend to have fewer financial obligations, they risk purchasing more coverage than they need at this life stage.
  • Opportunity Cost: Money spent on premiums might be used elsewhere, such as investments or debt reduction.
  • Changing Needs: Life insurance needs may change significantly as family and financial situations evolve.

In Your 40s and 50s

Your 40s and 50s are often a time of peak financial responsibility, making it an ideal period for many people to purchase life insurance coverage. Here's a look at the pros and cons:

  • Family Protection: Purchasing coverage at this age often aligns with the need to protect dependents.
  • Estate Planning: A life insurance policy offers opportunities for estate planning and wealth transfer.
  • Financial Security: Coverage provides a safety net during a period of significant financial obligations.
  • Higher Premiums: Health issues may arise during this period, which can lead to higher premiums.
  • Limited Options: Fewer policy options may be available during this period due to age and health.
  • Potential Overlap with Savings: At this age, accumulated savings might reduce the need for extensive coverage.

Over 60 Years Old

Purchasing life insurance over the age of 60 requires careful consideration of your unique needs and goals. Here's a look at the pros and cons:

  • Legacy Planning: Purchasing coverage during this time allows for structured legacy or philanthropic giving.
  • Final Expense Coverage: Life insurance can cover funeral and other end-of-life expenses.
  • Supplement Retirement: A plan could provide additional financial support during retirement.
  • Very High Premiums: Premiums can be significantly higher after age 60 due to age and potential health issues.
  • Limited Availability: Fewer policy options may be available to individuals at this age.
  • Potential Redundancy: Other financial assets and plans may already cover the needs addressed by life insurance.

Early Bird Advantages When Getting Life Insurance

The mantra "the earlier, the better" applies to buying life insurance. There are several key advantages that come with getting life insurance at a younger age, including:

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    Lower Premiums

    Life insurance premiums are set based on risk factors, with age and health being primary considerations. Younger, healthier individuals pose less risk to insurance companies. This is why buying life insurance young saves money.

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    Guaranteed Insurability

    One of the benefits of life insurance at a young age is safeguarding your insurability, protecting against the risk of future health conditions that might make insurance prohibitively expensive or even unattainable.

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    Long-Term Financial Protection

    A life insurance policy provides a financial safety net for your loved ones, ensuring their economic stability if you were to pass away unexpectedly. This long-term protection becomes increasingly critical as you take on more financial responsibilities.

Cost of Waiting

The impact of waiting to buy life insurance becomes evident when examining the cost of premiums. Here's a breakdown to illustrate:

Scenario 1:

A 25-year-old non-smoker male buys a 20-year term policy with a $500,000 death benefit; he's charged $28 monthly for coverage. In this case, the total cost paid over the 20-year term of the policy is $6,720.

25Total Coverage$500,000Term Length20 yearsMonthly Cost$ 28Total Policy Cost$ 6,720
Scenario 2:

The same individual waits until they're 35 to buy a similar policy. Given their age, the policy now costs $44 per month, leading to a total cost of $10,560 over 20 years.

35Total Coverage$500,000Term Length20 yearsMonthly Cost$ 44Total Policy Cost$ 10,560

While the individual who bought insurance at 35 paid $3,840 more for the same coverage amount and term length, this comparison isn't entirely fair. Purchasing insurance at 35 covers you during a higher-risk age range (35 to 55), compared to being covered between 25 and 45. However, the earlier buyer still saves on total premium payments and can find cheap life insurance, offering a financial advantage over time.

Risk of Developing Health Conditions

Securing life insurance at a young age helps mitigate the risk of developing health conditions that could inflate policy costs or render you uninsurable. Insurance companies base premiums on risk factors like your age, health status and lifestyle habits. Young, healthy individuals typically enjoy lower premiums, but the onset of health issues like heart disease, cancer or diabetes later in life can dramatically increase premiums.

For instance, a 25-year-old non-smoker might initially secure a 20-year term policy with a $500,000 death benefit at a rate of $28 per month. Suppose this individual is diagnosed with diabetes at 40. If they were to seek a new policy, they might face a significant premium increase due to their heightened risk —potentially even double the original rate or more.

This potential escalation emphasizes why the best age to get life insurance is typically during your younger years. Investing in life insurance while young and healthy effectively "locks in" your insurability, ensuring your coverage and rates won't be adversely affected by subsequent health issues. It's a proactive step to protect your future financial stability and ensure the economic security of your dependents.

Term vs. Permanent Insurance: When Does Each Make Sense?

Life insurance comes in two main forms: term and permanent, each catering to different life needs.

Term life insurance

This insurance provides coverage for a specified term (like 20 or 30 years). It's suitable for people seeking financial protection for a particular period, such as until children are grown and financially independent or a mortgage is paid off.

Here's when it makes the most sense to buy term life insurance:

  • Financial Protection for Young Families: Term insurance can provide substantial coverage until children are grown and financially independent, fitting well for families with limited financial resources.

  • Mortgage Protection: If you want coverage that lasts until your mortgage is paid off, term insurance can be an ideal choice.

  • Temporary Financial Obligations: For those with financial commitments that have an end date, such as a business loan or educational expenses for children, term insurance offers the necessary financial protection for that specific period.

Permanent life insurance

Permanent life insurance offers lifelong coverage and a cash value component that grows over time. Though it's more expensive, it fits the needs of people who may want to use it for things like estate planning or leaving a legacy.

Here's when it makes the most sense to buy permanent life insurance:

  • Estate Planning: Individuals looking to ensure that estate taxes are covered or who wish to leave a substantial inheritance may find permanent insurance suitable.

  • Long-Term Financial Security: For those desiring a financial safety net that lasts a lifetime, permanent insurance offers continuous protection.

  • Investment Component: The cash value growth in permanent insurance can be an attractive investment opportunity for those looking to build wealth over time.

  • Leaving a Legacy: If you have philanthropic goals or want to leave a financial legacy for future generations, permanent insurance can be a strategic choice.

How to Find the Right Life Insurance Policy

Finding the right life insurance policy requires careful consideration and planning. It's important to select the policy that aligns with your needs, goals and financial situation. Here are a few steps to help you navigate this process:

Assess your needs

Start by evaluating your financial responsibilities, dependents, debts and long-term goals. Understanding what you need to protect will guide you in determining the type and amount of coverage that's right for you.

Compare quotes from multiple providers

Avoid purchasing a policy from the first provider that gives you a quote. Shop around and compare quotes from various providers to ensure you're getting the best value. Consider both the cost and the reputation of the insurance company.

Consider additional riders or features

Many policies offer additional life insurance riders or features that can enhance your coverage. Whether it's a disability rider or an investment component, evaluate these options to tailor the policy to your specific needs.

Review the policy details carefully

Before committing, thoroughly review the policy details, including the terms, exclusions and potential penalties or fees. Understanding the fine print will prevent surprises down the road.

Consult with a financial advisor or insurance professional

If you're unsure about any aspect of the policy or need personalized guidance, consult with a financial advisor or insurance professional. Their expertise can help you make an informed decision that aligns with your situation.

Reevaluate your coverage regularly

Life changes, and so do your insurance needs. Regularly reevaluate your policy to ensure it continues to meet your needs. Whether it's a new family member, a change in financial obligations or retirement planning, periodic reviews will keep your coverage aligned with your life.

FAQ: About Life Insurance

Below are commonly asked questions to help you better understand life insurance and decide when is the right time for you to get a policy.

Do I need life insurance?
Should I get life insurance?
When is the best time to get life insurance?
Is it smart to get life insurance young?
Can I change my life insurance policy as my needs change?
Can I have more than one life insurance policy?
What happens if I outlive my term life insurance policy?

About Melissa Wylie

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Melissa Wylie is the Content and SEO Manager at MoneyGeek, with nearly a decade of editorial experience and six years of work in financial content focused on small businesses. She previously held SEO positions at Bankrate and LendingTree, with bylines on ValuePenguin and MagnifyMoney.

Wylie has a journalism degree from the University of North Texas. Her strong foundation in journalism helps her craft content that simplifies complex financial topics to help everyone feel confident when making decisions with their money.