At What Age Should You Buy Life Insurance?

Spoiler Alert: It’s Sooner Than You Think!

Key Ideas

  1. When it comes to buying life insurance, sooner is better.
  2. There are good reasons to carry life insurance, even if you don’t have dependents.
  3. Life insurance doesn’t have to be expensive.
  4. Thanks to the Web, buying life insurance is easier than you think.

Let’s face it, nobody really wants to buy life insurance.

After all, adding an extra expense to your budget for something you’ll (hopefully) never use isn’t at the top of most people’s wish lists.

However, life insurance coverage is a critical part of most sound financial plans. It also becomes absolutely necessary when you have dependents to care for.

Unfortunately, by the time most of us begrudgingly admit that life insurance is something we truly do need, we’re already well beyond the ideal age to purchase it.

So, when is the best time to get life insurance?

The true answer to this question will depend in large part on your individual circumstances, but, in simple terms, the answer is “The sooner the better.”

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It’s a Numbers Game

When looking at life insurance coverage from a pure cost perspective, some may say that the best time to buy life insurance is as soon as possible after birth. That’s because a life insurance policy gets more expensive with every year that passes by.

However, this isn’t practical, or advisable, for most people.

In our younger years, other priorities take precedence. Many of us have to focus on getting out of debt first. We’re also saving up to meet important goals like creating a sufficient emergency fund, buying our first home, and saving for retirement.

Millennials and other younger people are also choosing to delay marriage until later in life and tend to have less income and more debt than their parents did. These circumstances all contribute to the “deal with it later” attitude that most young people have when it comes to purchasing life insurance.

However, you might be surprised to learn that, in almost all cases, it’s ideal to purchase your life insurance coverage well in advance of your 35th birthday. Unfortunately, most people in this age bracket mistakenly believe that they can’t afford life insurance premiums.

A 2015 study released by the nonprofit Life Happens and LIMRA found that 80 percent of the people surveyed significantly overestimated the cost of life insurance. Those who fell in the Millennial age bracket overestimated the cost by as much as 213 percent, while Gen Xers overestimated it by 119 percent.

This misinformation has led over 54 percent of Americans to say that they’re unlikely to purchase a life insurance policy within the next 12 months. This is despite 43 percent of people admitting that they would feel a significant financial impact if their household’s primary wage earner were to pass away.

The sad reality is that less than 40 percent of Americans currently own life insurance, while close to 70 percent know that they need it. Don’t let yourself fall into this trap! Keep reading to learn more about the reasons why you might need life insurance even if you don’t have dependents, the true cost of life insurance coverage, and how easy it is to purchase your own policy.

Reasons to Purchase Life Insurance Early (Even if You Don’t Have Dependents)

It’s easy to understand why you might think that you don’t need life insurance if you don’t have a family to care for. However, there are other valid reasons to carry life insurance from an early age. Here are the top four.

1. Cover Your Debts

One of the most important reasons a young, single person needs life insurance is to cover your debts. Many young people who simply don’t earn enough to pay for their expenses end up taking out an unsecured credit card for day-to-day purchases and other necessary costs. As you rack up debt, ideally, you should have a life insurance policy that’s large enough to cover your outstanding balances.

If credit cards and loans are in your name only and your estate doesn’t have enough money to cover your debts, then creditors might be out of luck. But, if you have a joint credit card or a co-signer on any of your loans, the person who is left behind will be responsible for paying off the entire balance. This could put your loved ones in quite a predicament.

2. Replace Your Income

Although marriage rates are down from 70% in 1967 to less than 50% today, more people than ever are living in dual-income households. Unmarried couples sharing expenses need to consider how the loss of their income would impact the other party. If you were to pass away today without life insurance, would your significant other be able to maintain their current standard of living? If you’re not sure, then now is probably a good time to consider a life insurance policy.

3. Retain Your Coverage

If you’re eligible for group life insurance as part of your employment benefits, this is usually a great deal. These policies are often very expensive, of your employer might even cover the entire cost. However, if you leave your job, you don’t usually get to take your policy with you.

When you’re young, it’s likely that you’re not going to stay at the same job for the rest of your life. Depending solely on a group policy could leave you without coverage when you need it most. It’s better to purchase your own individual policy and consider any group policies as icing on the cake.

4. Pay for Final Expenses

Even if you don’t have any dependents or outstanding debt, if you were to pass away today, it’s likely that your loved ones would have to spend anywhere from $6,000 to $9,000 for your funeral services. If your loved ones are financially well-off and this expense won’t impact them, then you still may not need life insurance. However, if you believe this would create a financial burden, then you may want to consider purchasing a small policy to help cover these expenses.

The Cost of Waiting

According to the quote comparison website Policy Genius, the cost of a 30-year, $200,000 term life policy for a healthy 40-year-old male starts at $53 per month. That same policy for a 25-year-old male is just $31 per month. Over the lifetime of the policy, that’s a difference of $7,920!

In addition, the longer you wait to purchase your policy, the greater the chances are that you could develop a health condition that makes it significantly more expensive. In some circumstances, like if you develop cancer or conditions like high blood pressure or obesity, insurance companies might even deny you coverage altogether. This will leave you with a huge gap in your financial plan and could expose your loved ones to serious financial insecurity.

Since term life insurance premiums don’t go up even if you develop health conditions, it’s usually a good idea to lock in your rate while you’re young and healthy.

You Can Afford Life Insurance

We’ve already mentioned that most people overestimate the cost of life insurance. The truth is that a young, healthy individual can almost always get a term life insurance policy for less than the cost of your daily coffee habit. Studies also show that most of the people who think they can’t afford life insurance make room in their budgets for conveniences like cable and internet services and cell phone data plans. The harsh reality is that if you have money to go shopping, go out to eat, take a vacation, or spend an evening out at the movies, you can afford a life insurance policy.

Some insurance salespeople might recommend a permanent life policy with cash value. They’ll tell you that it makes sense to purchase this type of policy because you can use the cash for things like a mortgage down payment or the kid’s college tuition. However, this is rarely good advice.

Permanent life insurance is far more complicated than a term policy and the added fees, expenses, and surrender charges make these types of policies an unnecessarily costly option. Often, premiums for a whole life policy can be as much as 10 times more than a term policy with the same death benefit. When you’re trying to fit life insurance premiums into your budget, this is clearly not an appealing option. Especially if you’re first starting out, purchasing a simple, inexpensive, term policy is almost always your best bet.

Get Your Life Insurance Coverage in 5 Easy Steps

If you’ve read all of these facts and are now convinced that this is the right time for you to buy a life insurance policy, you’re probably wondering how to get started. Luckily, it’s much easier than you might think. Follow these five simple steps, and you can have a policy in place by the end of the day!

  1. Review your budget – start by using our budget planning calculator to evaluate your current expenses. This will help you find some wiggle-room to cover the cost of your new life insurance policy.
  2. Determine how much coverage you need – before you commit to buying a policy, you’ll want to learn the basics of how life insurance works and calculate how much life insurance you need. This is a simple process that should take you less than an hour. You can also use our life insurance calculator.
  3. Easily shop online – once you know what you’re looking for, it’s easy to shop for life insurance online and compare multiple policy quotes.
  4. Purchase your policy – when you’ve decided on the best policy and carrier for you, most companies allow you to complete your application online. Some even offer instant approval, so your coverage could start right away.
  5. Keep up with your premium payments – remember that buying a life insurance policy does you no good if you don’t keep up with your premium payments. Otherwise, the policy will lapse. This will leave you without coverage and you will have wasted all the time and money you initially put into purchasing your policy.

Final Thoughts

If, despite reading all of the above information, you truly believe you don’t need life insurance, that’s okay.

However, it’s important to keep your future goals in mind and decide if the cost of waiting is worth it to you. Considering that most people can purchase a term policy for less than the cost of a night out on the town, planning ahead is almost always in your best interest. This can help you create a secure financial future for your loved ones and save yourself a significant amount of money over the course of your lifetime.


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