Determining when to get life insurance: Is there a best age?

What is life insurance?

Before we delve into the when, let's first understand the what. Life insurance is a contract between an individual and an insurance company. In the simplest form, the individual pays premiums (regular payments) over a certain period, and in return, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured's death. 

Life insurance, at its core, helps provide financial security to your loved ones in the event of your untimely death. So that begs the question: When is the right time to get life insurance?

Am I too young for life insurance?

Many young adults believe they are too young for life insurance. They might think, "I am healthy, single, and have no dependents, why do I need life insurance?" The fact is being young and healthy can actually mean you're in the prime time to get a life insurance policy.

Here’s why: The premiums for life insurance policies are primarily determined based on age and health. The thinking goes that the younger and healthier you are, the less likely you are to die suddenly, hence making you a lower risk to the insurance company. Because of that lower risk, they can often afford to offer you lower premiums. The best part of buying a life insurance policy at a young age, when you’re presumably healthy, you can lock into lower premiums for the length of the policy, resulting in significant savings over time.

Even if you are single and have no dependents now, buying a life insurance policy would save the hassle and potentially higher costs later when those circumstances do change.

Pro tip: explore term life insurance

A term life insurance policy is generally a good choice for young people. For example, if you’re in your early 30s and just had your first child, you might opt for a 20- or 30-year term life insurance policy. This would help create a financial safety net for your surviving spouse and child in the unfortunate event that you pass away. The death benefit from the insurance can help cover remaining mortgage payments, offsets a portion of lost income, and contribute towards educational expenses for your child.

Am I too old for life insurance?

On the other end of the spectrum, people often wonder if they are too old for life insurance. The reality is, it's never too late to purchase life insurance, although it may be more expensive and challenging to obtain as you get up in age.

If you're older and have dependents or substantial debts that would be burdensome in the event of your death, a life insurance policy can help provide much-needed financial security. And, it’s never too late to put some protections in place if you don’t yet have a policy. Even if you have no major financial obligations, life insurance can still be used to help cover funeral expenses or leave a financial legacy to your loved ones.

Pro Tip: investigate permanent life insurance

If you’re in the age range of 40 to 60, you may find a permanent life insurance policy that ensures lifelong coverage to be a good fit, assuming you can afford the premium payments. This option can also serve as a means to leave an inheritance to a spouse or loved one, as well as provide a cash value should you ever need to tap into it.

The best age for life insurance

As you may have guessed, there really is no perfect age to get life insurance. The best age for life insurance will vary from person to person based on their unique financial circumstances. And because there are different types of life insurance, you should be able to find an option that works for your goals and your budget. 

That said, in general, the sooner you purchase life insurance, the better. Regardless of age, once you have dependents life insurance becomes more important to help financially protect your loved ones.

For starters, you’ll benefit from lower premiums due to your age and typically better health. Of course, if you’re in your 40s, 50s, or older, you may be in the prime of your career or in a better financial position to afford life insurance premiums. 

The bottom line

Deciding when to get a life insurance policy is a deeply personal decision that depends on several factors, including your age, health, financial responsibilities, and the needs of your dependents. While you're never too young or too old for life insurance, starting early generally means lower premiums and greater peace of mind. Consult with a financial advisor or insurance expert to evaluate your individual needs and decide when the best time is for you to purchase life insurance.

ChatGPT was used for idea generation, but the author made significant modifications and takes ultimate responsibility for the content.