When is the right time to buy life insurance?


If you do not have coverage at present, you should buy a policy right now. In financial planning, life insurance is one of the first lines of defenses in ensuring that your family is financially secure in case something bad happens to you.

The ideal time, however, is to purchase while you are young and have no medical conditions.

Why get life insurance while you are young

When applying for life insurance, a person is evaluated based on the risk he presents of dying at a certain age. The older you are, the higher the risk of contracting life-threatening illnesses.

This translates to higher premiums since premiums and approval of the life insurance application are based on how the life insurance company underwrites the risk:

  • If you buy a whole life insurance or any other type of life insurance while you are young, the premiums will be low and will not likely change over time.
  • When you buy life insurance when you are older or after you have been diagnosed with a disease, you are likely to be given rated premiums rates or premiums higher than standard rates. Or worse, you may be denied coverage because of your existing illness.

That is why while it is early and you are in relatively good health, you should already get insurance.

But life insurance can cover various needs at different stages in one’s life.

When will you need life insurance?

Here are some possible scenarios and cases when you would need life insurance:

The cost of death

In 2009, the total cost of a funeral for an American adult was $4,265. When a metal casket is used, the total cost reached $6,560. When a vault is involved, total expenses reached $7,755.

  • You are single. Single individuals will need life insurance to cover personal debt, as well as funeral and other related expenses upon one’s unexpected death.

  • You are married or are planning to start a family.
    Life insurance is meant to protect against financial loss in the event of your death. If you are the breadwinner or if other people are dependent on you for even part of the monthly expenses, you should prepare for this by getting insurance.

    If you are a homemaker, life insurance will still help, because in the event of your death, the family may have to get someone to do the services you are providing for the family, such as cooking and taking care of the children.

  • You have elderly parents.
    You should also get insured when you have elderly parents who depend on you for financial support and care. Your death will be catastrophic will there is no provision to take care of their needs since they can no longer earn an income themselves.

  • You are experiencing a life event that will affect your financial condition or the level of your finances. Aside from marriage and parenthood, these include:
    • Divorce or change in marital status.
      A divorce has significant financial impact. For two-income households, this will mean the loss of the other spouse’s income. This also means a higher level of expenses as you will be spending for the household on your own or getting a new mortgage. If you are covered through your spouse’s employee benefits program, a divorce can mean that you won’t have that cover anymore.

      Meanwhile, the death of a spouse will also mean that you are now the breadwinner, as well as primary caregiver of the family. You will also lose the coverage that you have under your spouse’s employee benefits.

    • A raise or a new job that increases your income.
      An increase in your income can mean a change in the family’s lifestyle. If you desire to maintain that lifestyle, you need to increase your life insurance cover to make provision for the additional income.

    • A new mortgage.
      A divorce can mean you and your spouse will split the proceeds of the family home and live in separate households.

  • You want to prepare for your child's college education.

  • You are paying for a mortgage or for other major and big purchases.
    Mortgages, car payments and the like still have to be paid in the event of your demise. If you leave your family without the ability to pay for these, they may face foreclosure of your home or car.

  • You are retiring.
    After retiring, you lose the employee benefits you used to enjoy and this includes life insurance coverage. Even when the children have all grown up and the mortgage has been paid off, you will need life insurance to cover final expenses, as well as any personal debt so that your spouse does not have to worry about these.

  • You have a substantial estate.
    If your estate is considerable, life insurance will help prepare money to pay for estate and other related taxes when your heirs come to inherit.

So you see, life insurance is useful for almost all stages of life. Insurance companies have designed a number of products to fit your changing needs. But will your cover be still good enough when the situations in your life are changing?

Making sure your coverage fits your needs

Since there are different stages in your life, you need to periodically review the level of life insurance coverage you have. You may also need a mixture of different products to address your current situation.

For instance, term life insurance is best when you’re in a budget and healthy. Whole life insurance becomes more attractive for those who are earning more and can afford the higher premiums.

Below is a chart that illustrates the type of life insurance you should consider at certain stages in your life:

It is nowadays easy to evaluate the insurance amount you will need at any point of your life – all you have to do is enter some details in a dedicated online calculator. On our website we have provided various calculators for free use and you can check out our Comprehensive Life Insurance Analysis calculator to easily and accurately estimate your current insurance needs.

And if you are going to buy life insurance now or at a later point, you will certainly want to visit the Life insurance buyer checklist guide where you will find various tips and guides on how to choose the right policy, coverage and company for your needs, whether to use a broker, and etc.

Was this question and its answer useful?
Not a bit
  • Currently 0/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Very useful
Have a question about insurance? Ask the experts