Maybe you might be tempted to think that you won’t need it, and you are right. Technically speaking, you are not the one that will need life insurance benefits. However, if you die, your family or dependents will certainly benefit from having a sound financial cushion. The question is: How does timing go into choosing life insurance?
If you have children, then life insurance is very important. Think of it as you would any other type of insurance. You don’t want to ever use it, but it gives you peace of mind even if it does need to be used. The best advice is to take out a policy as soon as you begin to plan a family. This article lists some of the other things to consider when planning for a baby. Plus, the younger you are when you start your insurance coverage the better your premiums will be. This is because young healthy persons are easier to insure.
No Kids, No Dependents
Maybe you have no children or dependents. Or maybe your kids are all grown and financially independent. Do you need life insurance in these cases? You might be tempted to think that insurance would just be an unnecessary cost, but there are other things to consider here.
A plan that would cover your funeral costs might be wise in this case; otherwise someone else would have to pay the bill – and the average cost of a funeral is now over £3,000. Also if you have any personal or business debt that you hold jointly with another person, this is another good reason to carry life insurance. In this way, in the event of your death all your debts and responsibilities are covered.
Can’t I Wait Until I’m Older?
This might sound like a reasonable choice, but there are some risks you should take into account. In the long run you might save money, but you are gambling that you are going to live long enough to take out a policy. It sounds morbid, but unfortunately people get sick and accidents happen. You never know. So if you have children or dependents it is best to take out a policy now.
Also as you get older, you are likely to develop health issues that might make it difficult to get approved for life insurance. Your premiums are certainly going to be higher. Bear in mind that if you do not fully disclose all health issues when applying, your policy might become invalid at the time of benefit collection. On the other hand, when you are younger and healthier you can qualify for almost any life insurance policy.
Driving Down Costs
There are multiple ways to reduce your monthly outgoings on life insurance, without having to affect your premium. Cutting down on alcohol and tobacco, or switching to an e-cigarette will help to massively reduce costs (and save you a bit of money day-to-day, too). Vegetarians, who are at lower risk of blood pressure related illnesses, will also find insurance much cheaper. And there are hundreds of other creative ways to help you reduce the cost of your insurance, such as joining a gym.
Whole vs. Term Life
There is a lot of heated debate over this topic. Term life is basically coverage for a certain amount of money for a certain term of your life. Term life insurance can be renewed, and you pay on a periodic basis (monthly, quarterly, yearly, etc…). Once the term is over or you stop paying, the coverage expires. The only benefit you get here is the payment in the event of your death, the so-called “death benefit”.
Whole life insurance, on the other hand, is promoted as an investment vehicle and insurance. Whole life exists until the time of your death, and you can build it up tax free. You can even borrow or withdraw from your policy if you need money. The premiums here are higher, but your investment can earn interest over time in addition to the death benefit.
Many people argue that the added costs of whole life coverage make it a bad choice. However, some of the best returns in recent years have been on term life plans as compared to other investment vehicles such as the stock market or real estate. The best strategy is to run a lot of numbers or hire a financial consultant to guide you through this process.
One instance where whole life insurance is superior is in the case of children that are disabled and dependent on you during your entire life. In this case you want your coverage to be in place and intact on the date of your death.
Take a few minutes to shop around for the best quote using a price comparison website. By shopping online you will be able to see how much different premiums will cost you per month, and find the quote which best suits your current income.
Life insurance is a vehicle that ensures financial security after you die. It could be for loved ones and dependents, or simply to cover funeral costs and debt. In any case, it pays to study your situation and take out the policy that best suits your needs.