Life insurance for the young
Life insurance has traditionally been associated with the later
stages of a person's life. The usual image of a typical life insurance
buyer is a person near the retirement age, who wants to save some
additional money for their heirs and has accumulated some wealth over
their lifetime. However, the reality is a bit different from what you
may think. Moreover, there are many reasons to buy life insurance
when you're young and it makes more sense to get insured while you
don't have much savings or assets. If you find it hard to believe, just
consider the following aspects of buying life insurance early:
It's cheaper
First of all, buying life insurance at an early age is much cheaper
than when you're old. Insurance companies base their premiums on the
person's life expectancy, which revolves around the person's age and
overall health condition. It's hard to argue that the life expectancy of
a 30-year-old in a good health is much higher than off a 60-year-old
with various health problems common at that age. That's why buying life
insurance when you're younger is cheaper. In fact, it's cheaper to the
point where you will buy it earlier with lower premiums and keep on
paying them for 30 years and it will turn out to be cheaper in general
than buying it later and paying only for 10 years in a row. Despite the
common belief that life insurance is expensive, it can be very
affordable if you choose the right policy type and do it while you're
young and healthy.
It's more useful
Let's face it, bad things do happen and that's exactly what life insurance
is used for. It may be the death of the policyholder due to a tragic
event or permanent disability due to a catastrophic illness. As a
result, the policyholder's family, friend or relatives are subjected to
serious financial turmoil if the person was the main income earner in
the household. When this happens at an earlier stage of a person's life
it is very likely that there are no extra savings yet and other family
member won't be able to cope with such a loss. In contrast, when things
like these happen at a later stage, there's usually a savings account in
place and other family members usually possess various assets that can
cover the financial impact of the policyholder's death or disability.
That's why it makes more sense to get life insurance while you're
younger while your family and dependents are still relying on you and
are very vulnerable to all sorts of financial problems.
It's a good long-term investment
Well, a professional financial advisor may argue with this statement,
but it all depends on the goals you set. When buying a whole-life
insurance policy it usually includes certain cash accumulation value
that increases over years and can be converted to stocks and bonds when
necessary. The interest rates are usually not as competitive as for
other investment tools, but if you get your policy early enough it can
accumulate an enormous value by the time of the payout. As a result you
can increase the value of the policy on top of its basic benefits, and
use it for financial operations whenever you need it. It's certainly a
nice feature for those who want to leave a hefty heritage to their
family in case of death.
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