When should I get life insurance?

Life Insurance is one of the essential forms of financial coverage that one must get. It ensures that your family and loved ones are taken care of in case of an unforeseen death. While everyone eventually ends up buying life insurance, there still needs to be more clarity regarding the correct time to get life insurance.

Do time and age matter when buying Life insurance?

To put it in simple words, yes, it does matter when you get your life insurance. Insurance companies check a number of factors, the primary of which is the insurance taker’s health and age. This is because as we age, our body becomes weaker, and obviously, insurance companies would tailor the terms of your coverage accordingly. You would also need to get some tests done to check your overall health profile. This medical examination is often provided by the insurance company through a trusted partner.

The sooner you get a life insurance policy, the better your chances of finding a high coverage, low premium policy, as your overall health would be better.

When should you get life insurance?

If you are unsure of when is the right time to get life insurance for yourself, you can consider the following factors to find out the ideal time to buy a policy.

• Financial conditions: It is imperative to acquire life insurance if you are financially dependent on others or if you have debt. This is due to the fact that life insurance makes sure your debts are paid off, and your family is maintained even in the event of your untimely demise. According to experts, a person should purchase a policy as soon as they have dependents, which might include parents, kids, spouses, etc. The procedure of purchasing a policy really should be completed on time because, no matter how long you wait, the premium cost will rise.

• Career: Life insurance comes with annual premiums, which means that one must be able to pay for them to avoid cancellation of the policy. A person can be employed at a very young age, also and can remain unemployed at an older age also. It simply depends upon what path you have chosen. A person belonging to a business family, ready to step in, is more likely to start working and earning from the age of 23-24. As such, they can start their life insurance policy from that age (even if they do not yet have dependents).

On the other hand, an individual who is pursuing a higher degree might end up studying till the age of 30 or even later. Once they get employed and have the funds to pay premiums, they should get insurance (whether or not they have any dependents). Keeping up with regular payments is essential to avoid any penalties.

Cover Amount:

Your career would also increase your credibility, thereby allowing insurance companies to offer better coverage options. The bandwidth of how much coverage you get would also depend upon how much you are earning at the time of getting the insurance. Thus, a higher cover would require you to earn a higher sum (monthly or annually). For instance, if you want a cover for $1 million, you would need to have a certain level of income in order to be eligible for it. The insurance company would assess your income before offering a coverage amount. If you do not earn enough, they will offer a lesser cover amount. Thus, the better you want the cover, the more your income should be. If the cover being offered is not as much as you want, you can do one of two things:

1. You can choose to wait (if your age so allows) and work harder to get your income high, and thereby the cover amount higher, or
2. You can take a lower amount of cover and get another policy in a year or two so that the final amount comes up to your requirement. Every individual condition varies. Thus, you need to assess the best solution for your situation. 

Term Life Insurance vs. Permanent Life Insurance:

Traditionally, we have only heard of permanent life insurance. However, the terms “term life insurance” has gained a lot of traction these days. How are these two different? Term life insurance is less expensive but only lasts for a specified number of years (for example, 20 years) and does not have a cash value. A cash value element is a feature of permanent life insurance. The cash value can increase with time if the policy is kept for a more extended period. The ability to convert term life insurance to permanent life insurance is sometimes provided by insurance firms, allowing policyholders to do so once they are able to afford high rates.

When you need the death benefit for a short period of time rather than for the rest of your life until retirement, term life insurance may be the more affordable choice. This will depend on how each person feels about themselves and their financial circumstances. To determine what is best for you, speak with an insurance representative or broker. The value of a permanent life insurance policy increases tax-deferred. Since the cost of insurance is constant for the duration of the policy, premium contributions to whole-life plans bought at a young age can accumulate significant value over the long term.

The gist of the matter is that the sooner you buy a life insurance policy, the better it is. You will get more flexibility of choice, have more time to compare options and have much better premium options. A term life insurance policy might provide your family with a financial safety net if money is tight. If you get permanent life insurance, the cash-value portion of the policy will have time to increase if you own it for an extended period. Given the multiple choices, you can easily pick which option suits you the most given your financial conditions, but it is essential to make room in your budget for a life insurance policy.