What Is the Right Age for Life Insurance?

While there is no hard and fast rule regarding the right age for life insurance, the most logical answer to that question is, “immediately after birth.” Since the cost of life insurance, whether term life or whole life, is directly related to the age of the insured, the older you get the more expensive the premium becomes. Whole life coverage, which has a level premium cost for the entire life of the insured, will never be more affordable to take out than right now – today. Each year, your age brings on an increase in premium cost.

The same holds true for term life insurance, which typically has a level premium rate for 10, 20 or 30 years. The longer you wait to take out this coverage, the higher the premium rate will be for the entire term of the policy.

From Cradle to Grave

Let's take the concept of insurance from birth a little further. Assume a parent or other relative takes out a whole life policy on a newborn. The premium cost for this policy will never be lower than it will be during this child's first year of life and that premium rate will be guaranteed to never increase during the life of the policy.

This policy, when written on a child, can be prepaid in one lump sum. Then, when the child reaches the age of 18 years, ownership of the policy can be transferred to the insured, at which point it can be cashed in or continue to be funded on an ongoing basis. Cash value, which will have accumulated tax deferred for 18 years, may be used for whatever purpose the insured decides, whether as a down payment on a house, a vehicle or to help with college tuition. Or, this insurance coverage can be continued for as long as the insured elects to pay the current premium amounts due.

Who Really Needs Life Insurance

For most people, the right age for life insurance revolves around feelings of financial responsibility. Getting married, having children, buying a home or taking on credit card debt are all responsibility creating activities. Since these activities typically occur between the ages of 25-35, this may seem the logical time to become insured. When your family depends on your income to provide them a certain standard of living, insuring your income from loss due to premature death is important.