If you are considering buying life insurance you might be interested to know: what is the best age to make that purchase? Life insurance policies are seemingly simple products right? You buy a policy, something unexpected happens to you and your beneficiary receives a big check right? Well, technically that is correct but there is much more to think about before making your purchase.
Some things to consider:
Who depends on you for a paycheck and how old are they? (Spouse, kids, etc.)
Does your spouse or significant other currently bring in a paycheck?
What is your current health status?
How old are you?
These things, among others are the key to deciding when to buy life insurance. Here, we will discuss term life insurance in specific as that is a much more popular option than whole life insurance. In my opinion, it is also the right choice for most, but not all buyers.
I think it is best to break your life down into age segments as this really highlights the pros and cons of buying options based on what is going on in your life:
Buying Life Insurance In Your 20’s:
At this stage of your life you might just be starting a career, might just be finishing college, and might be starting a family. Lot’s of “might’s” in that sentence huh? That is because this is the beginning of your independent financial life – you are just getting started. So really, the one question you should ask yourself is: “Do I really need life insurance at this stage of my life.” You might find the answer is not just yet. However, if you do have small children, or your significant other depends on you for a paycheck, you can likely score a 15 to 20 year term life policy for a very good price. Let’s face it, from a health perspective and life expectancy basis, you are likely a good bet for most insurance companies. If you are price conscience (and who among us isn’t?), then shopping around might surprise you with finding a very cheap policy that you can be happy with.
Buying Life Insurance In Your 30’s:
At this stage of your life you are more likely to have taken on more of everything: dependents, bills, and overall need for income. Life insurance should be a necessity for you if you have kids, a spouse, and a mortgage on top. Likely the most important reason to purchase life insurance is to protect the health and welfare of your children. Have kids that are 4 and 2? Then you should attempt to purchase a 20-year policy so those children can be taken care of through their early twenties. Don’t forget, you will likely want to cover their college costs too right? If you can afford it, and have the good health to support it, purchasing a term policy that is 12 to 15 times your annual earnings would be a good starting point in your decision matrix. Prices for these policies will still be good (although not as good as in your 20’s) as long as you are in good health and a non-smoker.
Buying Life Insurance In Your 40’s:
In my opinion, these are the ages where life insurance becomes a much tougher decision. If you have children they might be in their young or mid teenage years and still depend on you heavily for support. However, as you approach 50 this will decrease depending on the kid’s age of course. If you intend on paying for college then you will want to add in those expenses as well. The problem here is that term life policies are just starting to get more expensive. You might be served well by trying to secure a 15-year policy and that may take you very close to retirement age. Also, assuming your work for someone else and are not a business owner, you might be able to secure group life insurance through your employer. These policies are great options and they do not require health assessments (in most cases). You are “grouped in” with other employees as far as premium so you aren’t dinged for diabetic or other health conditions.
Buying Life Insurance In Your 50’s:
Potentially, this is one of the times in your life where you can consider foregoing coverage if you have a large enough nest egg, or not as many dependents. At this point in your life you might just be making the most money you ever will. Also, the likelihood that your children are, or almost are self-sufficient, is getting higher. Keep in mind too that a term life insurance policy at this age group is much more expensive that it would have been in your 20’s and 30’s. Not outrageous, but make sure you still need the coverage before you make that purchase.
Buying Life Insurance In Your 60’s:
If you are in this age group your need for life insurance might have just diminished. At this point, your dependents are likely grown and able to support themselves. Also, you may be close to paying off your mortgage where it is not such a burden any longer. Hopefully your nest egg has reached the point where your spouse or significant other will be well cared for should you pass away. Although life insurance policies at this age are still available if you shop around, the cost will be much higher, and will depend heavily on the quality of your health.
After reading this information you will see just how different buying life insurance is at 25 then 65 right? So many changes occur during your life. Depending on your age, perhaps a simple final expense policy will do the trick instead of a full-fledged term life policy. Regardless of your age, the keys to remember are your age, your dependents age, your income, and who will be affected by your death. Let those items be what drives your choice to either buy, or pass on, buying that life insurance policy. No situation is alike and the decision will ultimately be yours.
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