When should I buy life insurance?
When should I buy life insurance?
Answer:
When to buy life insurance depends on your individual circumstances and needs. Review the arguments on both sides of the issue, so you can determine what is right for your family.
Buy now
Life insurance premiums increase dramatically as you get older. If you buy permanent life insurance while you're younger and (presumably) healthy, you can take advantage of lower rates.
Your premium costs may increase, but these increases are strictly regulated. Cash value life insurance also offers a type of "forced savings", and the policy accumulates tax-deferred over time. Buying while you are younger provides the added advantage of extra time in which the cash value can grow.
Buying life insurance while you are younger can be especially important if you are in a high-risk group for any disease or medical condition that might make you uninsurable. If you choose to buy insurance for this reason, ask about adding a guaranteed insurability rider to your policy. This rider guarantees you the right to purchase additional insurance at specified times, without having to provide proof of insurability. This way, if you get married, start a family, or take on other responsibilities, you can purchase the insurance you need without worrying about whether you will be denied coverage.
Buying term life insurance while you are younger has certain advantages as well. Like cash value insurance, premiums for term life insurance increase significantly as you get older. By buying now, you can lock in low premium rates for the duration of your policy. If you choose to purchase term insurance, look for a policy with a renewability provision. This clause allows you to renew the policy without having to take a medical exam or prove insurability. However, your premiums will likely increase each time you renew your policy as a result of your decreased life expectancy
Buy later
In order to fully reap the benefits of this strategy, you must have the financial discipline to invest your premium savings on a regular basis.
Or, instead of depending on your own ability to faithfully invest each month, arrange for funds to be automatically transferred from your bank to the investment account of your choice.
Keep in mind, however, that while this strategy provides the potential for investment returns, these returns are not guaranteed. In addition, it would be unwise to delay purchasing any life insurance if you have children or other dependents who would suffer financially as a result of your premature death.
If buying later suits your needs more at this time, be sure to contact Demars Financial Group so we can show you some great savings vehicles that will match your current situation.