When is the best time to get life insurance?
The cost of life insurance, regardless of what type you buy, will be determined by your age, health and lifestyle among other factors. The older you are, the more ailments you have and the riskier a life you lead will all translate to a higher cost. With that said, right after birth, you are arguable the youngest, healthiest and most sheltered you will ever be, so the best time to get life insurance is right after birth. Insurance purchased right after birth can be locked in at a low rate if the premiums are paid on time for the term of the policy. If life insurance was not purchased for you as a baby or child, it is important to secure a policy before the age of 35 as the price gets exponentially higher each consecutive year.
Why do you need to get life insurance?
There are several factors that make life insurance a necessity:
- You are the sole financial provider.
- You have minor or disabled adult children who require full financial support.
- You have children who depend on you to pay for future college expenses.
- You have assets that are not paid off.
- You have not prepaid your funeral and burial costs.
- You do not have enough liquid assets to cover debt, taxes and legal fees incurred after death while your will is being processed.
- If you own a business.
What Life Insurance is Right for You?
Term Life Insurance is usually the less expensive type of policy to purchase because it only covers a specific time period, for example: 10 years or 30 years. The policy premium will be consistent but if you choose to extend the policy further, it will be at a higher rate determined by your qualifications at that later date. This type of policy is one you would purchase to help pay off your mortgage or to pay for your kids’ college tuition if something happens to you. You might also purchase this type of policy if your family depends in part or in whole on your income to sustain itself. Term Life Insurance would provide a payout to help offset that loss of your income if you were to pass in the next ten years or thirty years (or whatever the predetermined term of your policy is.
Universal Life Insurance is considered a permanent policy meaning that it is intended to be kept through your whole life as long as you pay the premiums on time. The premium is consistent throughout your life unless changed by you which is a feature unique to Universal Life Insurance. That is to say that you have the flexibility to adjust your premium (which changes your coverage amount) throughout your life. The caveat to having this versatility is that your premiums will be higher and the interest you earn may be adjusted each month by the insurer.
Whole Life Insurance is also a permanent policy. The premiums are once again higher than Term Life Insurance but in this case, they may not be adjusted. While this may seem less desirable, the insurer will typically provide a minimum monthly interest earning meaning you can budget both your payment and earned interest. With either of these permanent policies, a cash value is accrued on which the interest income can be tax deferred. Another similarity between these two policies is that they are often used for estate planning and to preserve inheritance for your beneficiaries.
Other Coverage Options
Uninsured or Underinsured Coverage is essentially just what it sounds like. If you get hit by a drive that does not have insurance or does not have enough insurance to pay for full amount to repair or replace your vehicle, this coverage will step in and pay the balance. A deductible may have to be paid before this insurance covers costs.
Medical Payments Coverage pays for the ambulance fees, hospital fees, rehabilitation as well as funeral costs for the driver and passengers regardless of who is at fault in the accident.
Basic Reparations Benefits (BRP) or Personal Injury Protection (PIP) pays for medical cost, income cost and essential services cost. What this means is, not only will some portion of the medical costs, but some part of the insured’s weekly income and money to pay for certain household and personal duties that cannot be performed due to injuries sustained in a covered accident.
Full Glass Coverage is insurance that will pay for any broken window on your vehicle without requiring you to pay a deductible first.
Replacement Vehicle Coverage is a policy that pays to replace a vehicle that is lost or stolen without deducting for depreciation.