When should I get life insurance?
It's a simple question, but the answer can be complicated.
People buy life insurance for different reasons. Some may purchase it to pay off large debts. Others want to leave their heirs a final helping hand. Financial needs from person to person vary.
Knowing when to buy life insurance and how much to purchase isn't a one size fits all scenario.
This guide can help you ask the right questions to figure out your unique needs and know when you should invest in life insurance.
Life Insurance Comes in Many Forms
Buying life insurance isn't a decision based on age alone. There are several different types of life insurance, and they each have age-related benefits to give you the best ROI.
Term Life Insurance
Term life insurance policies have expiration dates, which usually range from one to 30 years. Premiums stay the same throughout the term, regardless of inflation or health factors.
If you die during that term, you receive the life insurance benefit. If you outlast the policy, coverage ends and you forfeit your investment.
Term life insurance is usually the cheaper of the two types of life insurance.
Whole Life Insurance
Also referred to as permanent life insurance, Whole Life policies pays out its benefit when you die, regardless of your age or how long you've had the policy.
In other words, this type of life insurance is guaranteed as long as you pay your premiums.
Also, whole life insurance can build cash value that can you can withdraw if you decide not to continue with your policy.
When Should I Get Life Insurance if I'm Married?
Marriage is a common reason why many people get life insurance. Supporting a new spouse and making major joint purchases requires a strong financial backup plan.
If your spouse relies on your income to live (eg he or she doesn't work or has a lower income than you do), life insurance may be a necessity.
Or, if your non-earning spouse were to die, you still face funeral expenses, healthcare bills, or other debt.
In addition, newlyweds may also be thinking about starting a family. The younger you are, the lower the rates. Your future children will depend on your income, and buying early can ensure they'll be well taken care of.
What About if I'm Single?
Single individuals don't have financial obligations to anyone but themselves, so does life insurance make sense in this case?
In many instances, yes.
Keep in mind that when you die, your next of kin will be responsible for paying off your debts. They may have to cover funeral expenses, pay bills, and settle your estate.
If you don't have much in savings, they'll be responsible for paying the difference.
If you don't have much debt, life insurance might not make sense for you. But having a mortgage, car payment, student loans, or other major expenses make a strong case for buying life insurance.
You can name anyone as a beneficiary for your life insurance policy. Having this benefit can give your beneficiary peace of mind that your debts won't be their responsibility.
The younger and healthier you are, the less your life insurance will cost. So even if you're single, buying life insurance early can prove to be a smart financial decision.
Should I Have Life Insurance if I Have Children?
Having children is a life-changing experience in many ways, and this major event prompts many people to purchase life insurance policies.
Your children rely on you for financial support at least until the age of 18. If you and your spouse die, your life insurance can continue to provide for your children financially.
If you're the single breadwinner in your home and you die, your entire family may experience financial stress without life insurance. If your non-earning spouse were to die, you'd face the added expense of paying for childcare so you can continue to work.
Your beneficiaries can use the life insurance benefit to cover your funeral costs, pay for college, purchase a car, or get started in their adult lives.
Whatever the cost of living is today, remember that it will be more expensive by the time your children are adults. Even if you have other savings, a life insurance benefit can further help to lessen the financial burden.
On the flip side, consider the amount of money you'd pay for life insurance versus the benefit they'd receive if you die. If you could invest the premium in a higher yielding option than your life insurance policy, then life insurance might not be the best option.
Is It Ever Too Early or Too Late to Buy Life Insurance?
In some cases, insurers will only sell you a policy if you're above or below a certain age. For example, some companies require you to be between the ages of 18 and 70.
Also, many insurers may deny you a policy or charge you higher premiums if you have a health issue.
If you're lucky, your health will last a long time. But the longer you wait to purchase life insurance, the greater chance you have of experiencing some form of health issue that may prevent you from getting affordable life insurance.
Health problems are unpredictable. Waiting too long to buy life insurance could mean not being able to buy it when you're ready.
Final Thoughts: When Should I Buy Life Insurance?
Buying life insurance is a choice as unique as each individual considering it. There's no right or wrong answer, but if someone is depending on your financial support, it's usually a good idea to buy life insurance sooner rather than later if you can afford it.
Life insurance is the last favor you'll be able to do for your loved ones, and it can make your passing easier and less stressful as they learn to live life without you. This peace of mind is invaluable to many.
Use our Insurdinary quote calculator to compare options and rates in Canada today.