Most people will tell you: If you’re under 30 and don’t have children, you probably don’t need to buy life insurance. There are caveats to the common wisdom, however, and it actually can make quite a bit of sense to buy your policy earlier (even if you don’t have kids) rather than later.
Perhaps the best reason to purchase a life insurance policy in your younger years is the advantage you’ll have on premiums. Buying younger means, generally speaking, that you’re applying when you’re healthier. Since premiums are based on your health at the time of application, purchasing your policy now rather than waiting a decade or two makes perfect sense.
“Frankly, for a young person to buy term insurance is a very minimal expense. Less than what their phone bill is every month, that’s for sure,” says financial adviser, Harley Lockhart, who chairs the Financial Advisors Association of Canada.
One key decision to consider when thinking about a life insurance policy is the financial hardship—if any—that would be caused by your untimely death. If you are young, have no children, and your parents don’t depend on you for financial support, you could make a very good argument for waiting on purchasing a policy (remembering, of course, that your premiums will only go up as you get older). If, however, your parents co-signed a loan for your education and you wouldn’t want them holding the bag should you die prematurely, then a policy could make a lot of sense.
Like just about everything else in life, there’s a calculation you’ll need to make before you purchase a policy. In a recent article on life insurance and when to buy, Kiplinger’s editors suggest “an argument could be made that you should buy a policy now while you’re young and rates are low. And if someone — a parent, say — depends on you for financial support, then by all means, consider life insurance.”
Still, advises Kiplinger, you’d do well to “…consider the interest you could earn by saving and investing your money instead of spending it on insurance premiums.”
The trump card here, of course, is dependents. Even if you’re under 30 and in perfect health, if you have kids or anyone else who depends on you financially, you should have a life insurance policy. Remember: the key word is hardship. Who would pay your kids’ way if you were out of the picture? What would the financial burden be should you die? The loss of a parent is devastating enough, so you’ll want the peace of mind knowing that at least your family was taken care of financially in the event of your passing.
It’s important to think carefully about buying life insurance at any age, but perhaps more important at a younger age. The benefit of premium savings is pretty substantial, as is the peace of mind you’ll enjoy knowing that you’ve made a responsible decision that will benefit your survivors. But before you go an ink a deal with your local agent, make sure you’re financially prepared to make all your premium payments and that you fully understand the obligation you’re taking on. Missing a premium payment could mean that all the investment you made up until that point could evaporate—your policy could be canceled and you’d be out a lot of cash.
If you’d like to talk life insurance with one of our independent agents, the good folks at Freedom Insurance are happy to help. Give us a call or drop us a line. We’d love to hear from you!