When Is the Right Time to Buy Life Insurance?

One of the most imperative aspects of buying life insurance is deciding when in life you need to buy it. There are likely people wondering if coverage is intended for young adults just starting their careers, older adults settling into retirement, or a demographic somewhere in between.

The truth is there are several reasons to obtain life insurance no matter your age, which all influence the decision-making behind picking a policy. There’s one fact that always rings true, no matter what type of coverage you’re looking for — the younger you are, the lower your rates will be. 

Since life insurance can make sense for Americans all across the age spectrum, it’s important to break down the reasons one would seek a policy, based on their current life stage and all of the accompanying factors (e.g., health, dependents, responsibilities, debts).

Young Adults (20s to 30s)

According to data from the past decade, millennials are not likely to buy life insurance for a number of reasons. Many young adults fear paying high premiums, but according to a 2015 poll, Americans age 18 to 35 overestimated the cost of a policy by 213%. The lack of awareness contributes to the fact that 57% of U.S. citizens with life insurance are 45 and older. 

While millennials have to worry about student loans, marriage costs, and taking out a mortgage, these are all reasons that support having life insurance. Young adults may not think too much about their mortality, but whether they are married, have children, or are single, they would likely leave behind significant financial obligations and debt in the event of an untimely passing. 

The biggest boon for young adults interested in life insurance is the cost, the younger and healthier you are—the lower your premium payments will be. Whether a person is in their 20s or 30s, they can obtain 30 years of coverage at a reasonable monthly premium. A 30-year policy can cover several life events, like paying off those student loans and mortgage, or providing for your children’s college education and financial independence. 

Middle-Aged Adults (40s to 50s) 

While most middle-aged Americans aren’t worrying about marriage costs, and have either paid off (or are close to paying off) their student loans, there are plenty of other financial obligations left to consider. They can still be dealing with mortgage payments, and also have their children’s education to worry about. Also, the loss of a spouse’s income can cause a great burden if not planned for accordingly. Furthermore, those who are caring for those with special needs may also need to consider a plan to cover those costs.

Due to the reasons listed above, middle-aged adults are in a prime spot to seek life insurance. Despite that, while someone in their 40s or 50s can be in the best physical shape of their life, they’ll still pay more in premiums (in some cases double) than younger adults due to their advanced age. 

At this age, it’s best to ensure you’re weighing the options of each type of life insurance policy. For example, whole life plans also provide a cash value that can grow via interest, dividends, and diversified investments. Due to these benefits, whole life policies are significantly more expensive than term policies. 

Seniors (60 and above) 

While seniors are eligible for social security benefits at 62 and Medicare at 65, there are still reasons to seek life insurance into your retirement years. For starters, no matter what age you are, final expenses (i.e., burial and funeral costs) must be considered. Seeing how these costs can get as high as $12,000, a life insurance policy will prevent burdening your loved ones. 

Seniors may also want to take out life insurance to supplement retirement benefits, to leave an inheritance for their children and grandchildren, or to cover unexpected medical bills that may arise (wherein a whole life plan’s flexibility may help). 

Applying for life insurance becomes increasingly difficult as you enter your twilight years, but it’s not impossible. There are both term and whole life options available, as well as policies that don’t require a medical exam. Say a person is 65-years-old and can only obtain a 15-year policy; they may want to consider whole (or permanent) life insurance, which provides guaranteed, lifelong coverage—and flexibility in its use. 

Bottom Line

Life insurance may not be top of mind for every American, which can lead to missed opportunities; the longer you wait to take out a policy, the more expensive it will cost. While many young adults avoid life insurance, they are at the most advantageous position to make the investment. Still, there are reasons to seek coverage at any stage in life. If you’re just wondering what policy quotes are available to you, Fiona is a great way—try it today!