When Is the Right Time to Buy Life Insurance?
Purchasing life insurance is something that is rarely on the top of one’s to-do list. Unlike home and auto insurance, there is no government or lender demanding that you get life insurance. So, knowing when it’s the right time to buy life insurance can be difficult. Add to that the various types of life insurance available, plus the multiple reasons people purchase it, and this question can become even more confusing.
But there are a few moments in your life when buying life insurance can be especially important. The following are some of the best times to purchase life insurance.
1. When you are young and healthy
Many young people don’t think too much about life insurance. They may not yet have a family of their own, and they may not have enough assets to worry about who will get what should they pass away. But life insurance will never be more inexpensive than it is right now. The younger and healthier you are, the easier it will be to manage your premiums. And if your health ever changes for the worse, you may become ineligible to buy life insurance – so getting it while you are healthy will help to ensure you have some coverage later on.
2. When you start a family
Starting a family is when more people begin to think seriously about life insurance. What would your family do if you were no longer there to provide for them? Life insurance can help to offset some of the financial strain of losing a family member. Something as simple and inexpensive as a Term 20 policy can help ensure the kids are cared for until they are old enough to be on their own. Or perhaps you’d like to set up an income stream for your spouse if you die? This can be done with a little financial planning and a Whole or Universal Life policy.
3. When you purchase a home (or take on other debt)
When you purchase a home, your mortgage lender may want to sell you mortgage insurance as an add-on that will pay off your mortgage balance should you pass away. And while this product is better than nothing, it has a decreasing benefit (because your mortgage balance will presumably keep going down over time), and it only protects the lender. If your home is in joint ownership with your spouse or partner, Term Life insurance is usually a better option. This would ensure that your spouse has enough money to pay off the mortgage should you die – but because the money goes to them and not the lender, they have more options.
4. When you want to pay for final expenses and equalize your estate
Life insurance can play a crucial role in estate planning. Not only can it help pay for final expenses like funeral costs or final taxes, but it can also help preserve harmony in your family. We know that there can be hard feelings if one child receives more from the estate than others – but some assets can be hard to divide. For example, say you have a business (or other assets) you’d like to pass on, and one child is interested, but the others are not. Using life insurance, you can ensure that even though only one of your children is inheriting the business, the others can get roughly equal value through a life insurance claim.
5. When you want to leave a legacy.
Do you have a charity or cause that you are passionate about? You can name them as a beneficiary in your will, but your estate will be taxed first, and you may not be able to leave as much as you’d like. On the other hand, life insurance claims bypass probate and go to the beneficiary tax-free – so naming a charity on your life insurance can be a great way to engage in planned giving and leave a legacy.
If you would like to speak with one of our brokers about the type and amount of life insurance that is right for you, contact us today. We will conduct a needs assessment to help you make the right choices for your life insurance coverage.