Typically, younger people think that a life insurance policy is only needed later in life, but securing a good policy early on comes with certain benefits. Locking in the right policy while young may cost you much less in premiums and can generate savings for life.
“When we’re young, some of us don’t feel like we need life insurance,” says life insurance expert Meredith Bell, Director of Marketing at Everly Life. “We think we’re going to live forever and that life insurance is for older people. But the truth is that the sooner you start a life insurance policy, the better. A good policy, secured at the right age, can deliver serious long-term financial stability.”
Below, Meredith reveals why and when you should start to insure yourself for life.
Why Timing Is So Important When Committing to Life Insurance
“The best time to secure life insurance depends on individual circumstances,” says Meredith. “But signing up for a policy earlier in our professional lives can result in lower premiums and deliver a healthy cash value accumulation over time.”
The life-stage of the policy holder is a major factor in determining the monthly policy premium and nature of the policy. This is because life expectancy and illness risk are crucial to your insurability, and the cost thereof.
Premiums tend to increase as you get older because of increasing health risks due to age. Getting life insurance when you are younger can result in your premiums being lower, depending on other factors in your initial policy assessment.
How Insurers Calculate Your Premiums
Your age plays a large role in determining which insurance strategies will be better for you. If you’re starting or raising a family or setting up a business earlier in life, for example, your best insurance options will be different to those that apply to someone who is at a later stage in life. This will affect the price of the policy and its deliverables, too.
Life insurers calculate premiums by assessing your existing financial obligations, age, smoker or not, health status, location, lifestyle, and the type of policy you choose. They consider how likely you are to make a claim, and when.
“The premium your insurer charges is based on this likelihood. That’s why younger people typically pay lower premiums than older people with health concerns.”
A Guide to the Effect of Age on Premiums:
20s and 30s: Lower premiums due to likely good health and longer life expectancy.
“Lock in these low premium rates now and start building for the future.”
40s and 50s: Your insurance premiums will increase during this stage of life as potential health risks are deemed to grow.
“This increase due to age is weighed against lifestyle and proven health status, but it’s unlikely that you will get a policy as cheaply as one you got in your 20s. With potential ongoing financial responsibilities like mortgage repayments and children’s education, now is a good time to reevaluate your insurance coverage, too.”
60s and Over: Expect higher premiums in this age range due to increased health risks and shorter life expectancy.
“It’s wise to face it – this stage of life is the time to consider end-of-life expenses and inheritance details.”
The best age to initiate a life insurance policy is in your 20s.
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