Life insurance is one of those matters that we tend not to think about. Not only is it a financial administrative issue we need to take care of, it also forces us to consider our own mortality. We have to acknowledge that we will die one day and make plans for after we are gone. That’s a lot to deal with when reading a brochure.
Nonetheless, it is something most people need to take out at some point in their life. But when is it necessary to start thinking about it? The answer depends on your life factors, as well as the type of life insurance that you decide to get.
Let’s look at the latter factor first. There are many types of life insurance, but the main categories are term life insurance and whole life insurance.
What is Term Life Insurance?
A term life insurance policy is taken out for a fixed measure of time. For example, a young person starting out in their career may get a policy for a term of thirty years. This will cover their prime working years, paying out a sum if they die during that time. It generally is not available for older people or people with severe illnesses, as it is meant to cover unlikely death only.
Term life insurance is relatively affordable, and is the most common type of life insurance people take out.
What is Whole Life Insurance?
Whole life insurance covers a person’s whole life. In other words, they continue paying premiums until they die, even if that is long after retirement. Whole life insurance is the more expensive type of life insurance. Since you pay it “permanently,” the earlier you start paying the more you will pay out over your lifetime.
Most whole life insurance policies include a cash benefit, which can be drawn from years down the line. It serves as an additional kind of retirement savings fund.
Now let’s get into when a person should start thinking about getting life insurance. There are a number of potential milestones that can prompt one to get life insurance.
The start of your career
Some people get life insurance as soon as they start working, even if they don’t have any dependents yet. There are good reasons for this. One is that premiums may be significantly cheaper than if they wait. However, the main reason is that a disability or chronic illness may occur, at which point they may not be able to get life insurance.
Getting life insurance before anything can happen is beneficial as it prevents the possibility that you will be left without any options when you are trying to leave money for a family.
A number of young people support their parents, and they may get life insurance at the start of their careers to ensure their parents have financial stability if something happens to them.
After cohabiting
Marriage used to serve as an easy milestone for a person to start considering life insurance, but many couples choose not to get married or only get married years after moving in together. The equivalent is the start of that period of cohabitation. When you move in together, you take on roles within the household. One partner may be the primary breadwinner, and they will need life insurance in case anything happens to them.
When having children
If you decide to have children, you should get life insurance if you don’t have it already. This is true for both parents, even if one is a stay-at-home parent. This is because their loss will leave real financial challenges, as their partner working full-time needs to pay for childcare.
Life insurance is crucial for parents to get even if they do not have financial issues, as it saves the remaining parent (or caregivers) from having to stress about taking care of the childrens’ basic needs. It keeps a level of stability when they are going through the worst time in their lives.
After buying a home
Whether or not you have children, after buying a home can be a good time to think about getting life insurance. You now have a mortgage to pay, and if you or your partner is left without funds, you could lose the home. Life insurance that covers the cost of monthly mortgages (or even the cost of the entire home) can save the survivor the grief of having to lose the home you built together.
Consider getting life insurance now if you don’t already have a policy. While there are different types of policies that suit different people, you should at least get a term policy. Life is full of surprises, both fortunate and unfortunate, and you want to be prepared to take care of the people you love, even if you have not yet met them.
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