Millennials are the least likely to purchase a life insurance policy, and that does make sense. Most 25 year olds are struggling to afford rent, and the thought of adding another bill that isn’t mandatory is absurd. The general consensus is that you should purchase a life insurance policy before the age of 35, but that doesn’t tell the whole story.
Technically, the best time to invest in life insurance is right after birth, but the reality is that most people don’t bother purchasing it until their 30’s. Remember, life insurance is age-banded, meaning it gets more expensive to purchase the older you get. Life insurance will never be cheaper than right after you were born. Let’s take a closer look at the pros and cons of purchasing life insurance at various ages.
Many people don’t realize that a parent can purchase a whole life insurance policy in one lump sum for their child. When your kids turns 18 policy ownership can be transferred over to them. Then they’ll have the option of continuing to fund that policy, or cash it in if there’s any equity in it. Since the cost of the insurance is fixed for the entire life of the policy, and because life-insurance cash values are tax deferred, purchasing one for your child at a young age can go a long way towards setting them up for success in the future.
One of the main reasons people cite for not purchasing life insurance is that they can’t afford it right now. However, the reality is the longer you wait the more expensive it’s going to be. Not only that, but most people grossly overestimate the cost of a life insurance policy. According to Investopedia, in 2015 people between the ages of 18 and 35 overestimated the cost of a life insurance policy by a staggering 213%.
The bottom line is this, if you don’t have life insurance and continue to put off buying a policy it is going to cost you. The average cost of a 30-year policy with a $100,000 face amount is roughly $156 a year for a healthy 30-year-old male. That cost rises to $216 for that same male if he waits to buy a policy until he’s 40 years old. That’s an $1,800 difference over the life of the policy, and that’s for a healthy person! If you develop any health issues before you purchase a policy that can drastically impact the cost of your premiums.
The earlier you can buy health insurance, the more affordable it’s going to be. Yes, it can be hard to wrap your head around paying for something that isn’t mandatory, but you will need it at some point in your life and if you wait too long you’ll be paying a hefty premium for the delay. Take the time to do your research and figure out how much a policy will cost you now, and how much it could cost you if you wait. Always take the time to consult with an insurance professional before purchasing a new policy. The people at TGS Insurance are experts on life insurance, and always ready to help! Visit www.tgsinsurance.com for more information.