Is it the Right Time to Buy Life Insurance?

Life insurance is a funny thing. You don't really want it until you need it, but if you wait until you need it to buy, then you've waited too long. Let's talk a little bit about the right time to buy life insurance.

Technically speaking, the very best time to buy life insurance is shortly after birth. The cost of a life insurance policy is directly tied to your age, becoming more expensive as each year goes by, so "the sooner the better," from a cost perspective, is the answer to when it's the right time to buy life insurance.

Insurance for Infants

While there are arguments both for and against a parent or relative buying life insurance for an infant, a whole life policy with accumulating cash value could, over the first 18 years of the child's life, amount to a substantial amount for someone graduating high school and about to go to college. At 18 years old, ownership of the policy can either be transferred to the insured or he/she can opt to cash out any accumulated equity. That policy, which may have been funded with a lump sum payment 18 years previously, could prove to be a very welcome source of income at an important time.

Insurance and Debt

A 20-something just out of college and just going into the workforce may, if without the needed savings, get a credit card to help with relocation expenses to and housing expenses for his/her new location. Anything charged on this new card is what's considered unsecured debt which, in the event of the cardholder's death, must be paid off by his or her estate. While it would be ideal for this person to take out an affordable term life insurance policy to cover the amount of this debt, the fact is that most individuals at this age are more concerned with the payment of current bills rather than taking on new ones. Plus, if you have no dependents for whom you're responsible, leaving behind a credit card debt may not be a big deal in your mind.

Spouse and Family

Once you've gotten married and started a family, things may change drastically in your mind regarding your financial responsibilities. With others now depending on your financial support for their standard of living, you'll likely feel obligated to take out insurance if you haven't already. The best time is now!