Do you think you're too young for life insurance? The optimal time to buy a policy may surprise you.
Do you think life insurance is only for someone older than you? Or that it’s only something you need to think about when you’re married or start a family? Turns out, now might be the opportune time for you to get a policy.
Here are six reasons why getting life insurance earlier makes sense.
1. Cheaper Premiums
There are many factors that affect life insurance premiums but your age and your health are arguably two top determinants, so why not lock in low premiums now? When you buy a term policy the rate is set and you pay the same premium for the duration of your policy term.
Some policies allow you to add on extra insurance later on or extend the life of your term policy if you need to. Sitting with an insurance advisor can help you determine what makes the most sense for your current lifestyle and life plans.
2. While You’re Still Eligible
Certain illnesses or health conditions can render you ineligible for most life insurance policies. Taking advantage of the now, while you’re hopefully still healthy, might prove to be beneficial. If you wait until later on in life, and unfortunately get sick in that time, you may no longer be eligible.
3. You Own – Or Plan To Buy – A Home
Being a homeowner is a great accomplishment, you have an asset you should be proud of. When you die however, the last thing you want is to leave a family member with the burden of paying for your home. That’s why having life insurance in place that can pay off the mortgage balance is important.
Buying a term life insurance policy to pay off your mortgage or adding to existing term, permanent, or universal policies to cover the cost of your home may help protect your family.
4. You’re Getting Married Or Starting A Family Someday
Taking care of your family is important. Having a life insurance policy in place will help ensure that if something happens to you, you’ve equipped your family with the financial support they may need to stay in your current home, keep up with day-to-day expenses, help cover debt, and more. Most families budget and plan their lifestyles based on both incomes so a sudden and unexpected change in those plans could leave your spouse in financial hardship.
5. You’re Looking To Invest
Certain types of permanent life insurance policies can be used as a means to invest or save. A whole life or universal life policy are the two primary types of permanent insurance that allow you to accumulate investments inside the policy. With some participating whole life policies, you’re also entitled to dividends from the insurance company.
Two pros with these policies are one, your investment grows in a tax-sheltered basis within the policy. The second is that you can borrow against your life insurance policy’s cash value if you need money to, for example, buy a home, cover unexpected medical expenses or pay for your child’s education.
6. You Have Student Loans
If you have student loans, you may want to consider getting life insurance. While government student loans forgive your debt if you die, private student loans may become the responsibility of a co-signer in the event that something happens to you.
Since most people take out student loans when they’re relatively young and healthy, you may be able to get an inexpensive term life insurance policy to cover the value of your student loans during the standard 10-year repayment plan.
Different choices or plans for your life could determine when, how much and what kind of life insurance would make sense for you. The earlier you get a policy may help you save money, plan for your family and invest in your future.
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This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.