Life insurance isn’t something that often gets brought up in conversation, especially at our age. I’ve been in the industry for almost 10 years and I know very few people my age who have life insurance. If they do, it is most likely through work.
Life insurance has a sort of stigma around it and I get that. It wasn’t something we were ever taught about in school. It is often understood to be something we only need as we get older. Life insurance is also something most seem to think is too much of an investment at this point in life. However, whether you are single, married, starting a family or have a family, life insurance might be worth looking into.
“People don’t act on purchasing life insurance early, because in traditional schooling we aren’t taught about personal planning,” explains Julia Walker a Licensed Financial Services Professional. We aren’t taught about it and it is something rarely discussed among friends and family (if ever). However, life insurance is something to consider, no matter what stage of life you are currently in.
Why You Should Consider Life Insurance Sooner Than You Think
You Have Debts
“A lot of people don’t think about who would get the burden of their debt if they were to pass away, “ Walker points out. Your mortgage, any personal loans you may have or loans with a co-signer will need to be dealt with. It might not always be the case that others will be left with the debt, but in that “what-if” scenario, Walker points out “life insurance is a pure protection plan.”
Another important aspect to consider is that it provides income replacement for your spouse, children or others who may depend on your paycheck to cover any day-to-day living expenses.
You are Young & Healthy
People seem to think of life insurance as more of a luxury than a necessity. It’s usually thought to be way too expensive, which it certainly can be. However, purchasing it while you are young and healthy, will guarantee the most favorable rates.
“Getting life insurance earlier is financially smarter,” notes Walker. “Statistically as we get older, more health issues come about and because the premium you pay for life insurance is based around your health, BMI, blood tests and lifestyle, it is typically cheaper when you are younger no matter the type of policy you purchase.”
Purchasing a term policy can be extremely affordable if you are young and healthy. It also allows you to lock in the rate and convert to a permanent policy when necessary. However, Walker does advise that you need to make sure the company you purchase insurance through allows conversions to a strong permanent policy where you can utilize the cash value advantage.
Walker did just that, “I took advantage of my young age and health. I got the best rating, lower price and locked that in as a term which can be converted to a permanent policy for planning in the future.”
Your Need Will Increase Over Time
As we get older life gets more serious. We start to purchase homes, we get married, we start a family and all of these things can/should be protected. Life insurance allows for that protection. Purchasing it at a young age, prior to those life-changing moments, goes back to being young and healthy.
The cost of life insurance is solely based on your age and health. It is something to seriously start considering as a piece of your financial plan and future as early as you can. “Talking about the what-if scenarios surrounding life insurance is never a fun conversation to have, “ Walker says. “However, it is what causes people to take action.” The appeal of insurance will become more clear as you get older. However, waiting until then could cost you.
What Kind of Life Insurance Should You Purchase
There are really two types of life insurance policies; term policies, and permanent policies.
Walker explains this as renting a home vs. buying a home. “Term insurance is like renting a home, you pay your rent (premium), it’s temporary coverage and a great place to start, but you aren’t building any equity.”
“Permanent insurance is like buying a home, it might initially cost more, but it is more affordable in the long run and you are building equity.”
Term life insurance tends to have a much lower cost than permanent. Because of this, it is a great place to start, especially for budgetary reasons. The premium stays level for as long as the term period but will increase substantially after the term expires. It is a great place to start as it allows you to lock in your insurability at an affordable rate.
With permanent insurance, you are covered as long as you are paying premiums. While permanent insurance is more expensive, initially, it does build cash value which allows you to borrow against it.
Walker points out that “a lot of people will purchase permanent insurance on their children. Not only does it lock in their insurability at a young age, but it also allows them to have the cash value to use for college or any post-college loans. “Child policies are also great for gifting. They can be used to pay for a wedding or as a down payment on a house from the parents or grandparents.”
Permanent insurance provides a more long term option. It is a great asset to include in your long-term financial plans.
“People are hesitant to purchase life insurance because of the generalities around it,” Walker states. However, if securing your financial future is something you put focus on, life insurance is definitely something to consider. While you might not be married with kids yet, there are still plenty of reasons to consider the purchase of life insurance.
Julia’s mission is to guide individuals, families and business owners toward health and wellness in all aspects of life; financially, physically, and emotionally. She is passionate about continuous education and overall health and happiness. Her time is spent coaching sports for young girls, as well as adults through her financial practice. She helps her clients understand and create a healthy financial outlook. She is committed to helping people prepare for the worst and plan for the best in life, in the best way that works for them and in a way they fully understand. She does this by building a relationship so she really gets to know them as individuals, then focuses on covering short-term needs and intentions, as well as achieving long-term goals.