There are benefits associated with getting a life insurance policy as a young adult. One main benefit to purchasing life insurance at an early age is price.
One benefit to purchasing life insurance while you’re young? Significantly lower policy costs.
While you might think life insurance is the last thing a young adult should be contemplating, consider this: you never know what the future may hold for you and your family. It’s an important factor, and overlooking how affordable term life insurance can affect successful financial planning is a grave mistake.
“Considering whether to purchase life insurance requires looking ahead to your goals in the next five to 10 years, not just evaluating your life in the present,” says certified financial planner, Tom Arconti, in the Danbury Connecticut News-Times.
There are a few different types of life insurance available to you when you’re young and in your prime, and the best choice often depends on an individual’s lifestyle and long-term goals.
While permanent insurance can be the most expensive – it covers people for their entire lives – term-life insurance may be the best option. Term life can be inexpensive and provide more flexibility, and that’s always attractive. Standard term life policies cover death and provide family protection when it’s needed most. Consider it income replacement if something happens, particularly to a stay-at-home home mom or a self-employed spouse.
But purchasing life insurance early on will not only protect you from the unknown, it’s certain to save you money in the long run.
And if financial planning is a key to your future, life insurance policies often offer significant growth opportunity – but that opportunity is maximized if you begin investing in them early on.
If you’re a bit older, take the advice of Certified Financial Planners like Susan Soesbe. She says individuals approaching retirement have a few additional factors to consider before purchasing coverage.
According to her report in the Sacramento Bee, Soesbe once advised a 74-year-old woman to consider her savings before purchasing a single-premium life insurance policy. Whether you’re young or more mature, having sufficient cash reserves to cover emergency expenses might put you in a position to purchase life insurance. Life insurance can be used to protect dependents, cover final expenses and even make selfless donations to charity. Soesber says her client thought about buying a $100,000 coverage policy because her certificates of deposit were returning very low rates.
“While the policy you’re considering may have a stated rate of return that is currently higher than what certificates of deposit are paying, that rate needs to be adjusted downward to factor in other insurance-related expenses that CDs don’t have,” Soesbe says.
Most experts advise anyone purchasing life insurance policies to target five to seven years of their income with the proceeds. That target is often enough to ensure beneficiaries and family members will have the financial means to pay off personal expenses and debts the policyholder might leave behind.
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