Pinpointing the right time to buy life insurance is crucial. If you buy it before you really need it, you’ll probably end up spending more than you need to. You may also not buy enough of it. However, if you wait to buy it until long after you need it, it may become prohibitively expensive.
So when is the right time to buy life insurance? Once you have someone in your life who would suffer financially if you died. For most people, that means when they get married and/or have kids. There are other reasons you may want a life insurance policy, however – you may want to create an inheritance or leave a financial gift to a charity or institution.
You should buy life insurance as soon as possible after you decide you need it. There’s some wiggle room here, however – some financial experts would suggest that young married couples should buy life insurance before they have kids so that they can lock in rates. But not everyone is certain on kids or a timeline for kids. For these people, it doesn’t necessarily make sense to spend money on years of life insurance they don’t need.
Most parents don’t start the shopping process until they’ve become pregnant – women, more specifically, tend to start in the second trimester. While you may think the timing in this situation is perfect, it’s actually not – medical conditions that can arise in the second and third trimesters may raise rates for pregnant women, and as your weight increases you could potentially slip into a lower health rating. Most pregnant women can get normal life insurance rates, however, though it sometimes makes more sense to wait until after a successful pregnancy.
Remember to always buy term life insurance, not whole. Whole life insurance, also called permanent life insurance, is more expensive and mixes insurance with investments, which creates a worst-of-both-worlds situation. Term life insurance lasts for a specific period of time in order to cover specific financial obligations, like your mortgage or until your kids are done with college. If you buy term life insurance when you’re young, it’s very affordable – an average rate for a thirty-year-old male with no health problems is between $20 and $30.
The older you get and the longer you put off buying life insurance, the more expensive it will become. Your age both directly and indirectly affects life insurance rates; not only is your age a direct variable that goes into the underwriting process, but as you get older, the more likely it is that you’ll develop a medical condition that negatively affects your life insurance rates.
In short: buy term life insurance at the youngest age possible, but only after you’re certain that you need it. Don’t put it off and, if you want, buy it a little early in order to lock in low rates.