November 23, 2022
  • November 23, 2022

What is the right age to buy life insurance?

By on February 8, 2022 0
There is no rule on when someone should buy life insurance, but as with saving and investing, there are good reasons to start young.

Many people in their 20s and 30s may think they don’t need a life insurance policy, but now might be a good time to get a great rate. No matter your age, here’s how to determine the right time to buy life insurance.

Assess your financial situation

Whether you are 20 or 50, the decision to take out life insurance depends on your financial situation. Specifically, if someone were to be financially impacted by your death, having life insurance in place can be a smart move to help support that person.

For example, someone who has a joint mortgage, car loan, or credit card debt might choose to purchase a life insurance policy to ensure that their co-borrower can cover those debts should the unexpected arise.

On the other hand, someone in their 20s who is single and debt-free might wait to purchase life insurance until a financial need arises. But it’s worth bearing in mind that rates go up as you get older, so sometimes buying a policy before the financial need arises can end up saving you money.


Determine who will benefit from life insurance

Often, young single people do not feel the need to take out a life insurance policy. But as life changes and people get married and have children, suddenly there is someone who could be in financial trouble if you were to pass away.

Before taking out a policy, think about who you will designate as your beneficiary (or beneficiaries). Next, determine how much of a policy you will need to support these people and how long it will need to last. For a new parent in their 30s, a 30-year term life insurance policy can be a predictable option that will last until the children are adults and have graduated from college. At this point parents can decide if they should continue to be covered or if their financial situation has changed to the point that it is no longer needed.

Benefits of taking out Youth Life Insurance

Applicants tend to get the best life insurance rates when applying in their 20s. This is because many people tend to be healthier during this time, which means a younger applicant can lock in a term life insurance policy for 20 or 30 years at a lower rate.

For whole life insurance, the benefits of buying a young policy can be even greater, as you can lock in a permanent death benefit and have more time to accumulate cash value. It is partly for this reason that whole life insurance is often the right choice when purchasing life insurance for a child.

As people age, medical conditions tend to crop up, which can lead to a higher policy premium or even exclusion from certain types of life insurance. This is why buying the same policy at 25 and 45 will result in dramatically different rates.

The essential

There is no set age that makes the most sense to purchase a life insurance policy. When you need a policy depends more on your financial situation, including who depends on you for financial support and how much debt someone would have to cover in your absence. Using them as a guideline, many people find that buying life insurance in their 20s or 30s makes the most sense and often results in the lowest possible rates.