When Should You Get Life Insurance?

One question that insurance experts are often asked is “When should someone get life insurance?”

Many people, especially young people just beginning their careers, find the idea of adding another monthly payment to their list of bills daunting. It’s also unpleasant to think about the implications of dying and leaving your family and friends behind. However, life insurance is an important investment that could save your loved ones from unnecessary debt in years to come.

What is a life insurance policy and why is it important?

A life insurance policy is a contract made with a company or an agent, such as Venture First Advisory, wherein you pay a monthly premium to an insurance company. In return, a lump sum is paid to your beneficiaries upon your death. While this concept is easy to understand, it becomes confusing when you consider different life insurance options and how much coverage you may need.

To determine the best life insurance policy for you, read our resource about different types of life insurance here. When calculating how much coverage you need, it is best to consult your insurance advisor for an exact amount. However, there are ways to approximate how much you need.

One way to estimate how much life insurance you need is by taking your average yearly income, multiplying it by ten, and adding on the amount of your mortgage. So, for example, if you make $60,000 per year and your mortgage is worth $300,000, you’ll want to be covered for $900,000 within your life insurance policy.

While it can be upsetting to think about passing away unexpectedly, a life insurance policy is important because it protects anyone who is financially dependent on you from taking on your debts. If your partner or spouse depends on your income to make ends meet, or you have a significant amount of debt, you don’t want your loved ones to be burdened by your death.

What is the best age to get life insurance?

Your insurance advisor can help you find a policy that works for you at any age, but there is no right or wrong age to get it. However, most experts recommend that the sooner in life that you sign up for life insurance, the better.

Many people in their twenties and early thirties are more concerned with making ends meet than with taking on an additional payment each month. However, many of these same people have credit card or student loan debt that does not disappear should they unfortunately die. If your parent co-signed on your card or debt payment, this means that your debt will be assigned to them if it is not paid off when you die. Having a life insurance policy will protect them from having to take on an extra burden during a time of grief.

Another reason to get life insurance as early as possible is for a consistently low premium. The later in life that you sign up for your insurance policy, the more likely it is that you will pass away soon. Younger people are less of a risk to insurance companies and therefore pay less in premiums each month. Your age comes at a further advantage if you’re considering a permanent life insurance policy, which features an additional investment component so that you begin to save for retirement at a young age. Learn more about permanent life insurance policies here.

There is no right time to get life insurance and it is never too late; however, experts agree that it is advantageous for you and your loved ones if you secure a life insurance policy before the age of 35.

So, when do I get it?

The moment that someone begins to rely on your money in order to maintain their livelihood, you should obtain a life insurance policy. If you have a child or are supporting a parent or partner, you need a life insurance policy to ensure their safety if you were to suddenly pass away. It is so important for new parents to get life insurance before or right when your child is born; it provides extra support for your child and your partner if you were to die. It is recommended that anyone who is recently married or expecting a child to sign up for a life insurance policy.

Another big life event that impacts life insurance is the purchase of a home. Your mortgage payment does not go away, even after you have passed away yourself. Make sure that your mortgage is paid off with a life insurance policy so that you don’t risk saddling your beneficiaries with debt that has nothing to do with them.

If you are interested in finding the best life insurance policy that will help to protect yourself and your family, book an appointment with Venture First Advisory today. Our experienced insurance advisors will help you find the life insurance policy that works for you.