When Should I Buy Life Insurance?

While a number of factors will impact your decision, most people get life insurance when there’s a major change in their lives- getting married, having kids, or buying a house. People opt to get life insurance at these life milestones because they mark points where others are financially dependent on them, and they don’t want to leave loved ones without income or with debts upon their death.

Although many people avoid the topic of life insurance when they’re in their 20s and 30s, this is actually the best time to apply, as it’s cheaper and easier to qualify for life insurance when you’re young and healthy.  

How Much Does Life Insurance Cost?

The good news is that life insurance costs significantly less than most people think! A recent study found that half of millennials significantly overestimated the cost of a $250,000 policy, incorrectly guessing it would cost at least $1,000 per year, when in truth, the coverage is FAR less.

Most twenty-, thirty-, forty-, and even fifty-somethings will be able to quickly and easily get affordable life insurance. But it is worth noting, that dangerous hobbies like skydiving and base jumping, or significant health risks like family history of cancer can make this coverage more. 

But we found a company where a healthy 35 year old with “normal” hobbies and no major health concerns could get up to $1,500,000 in coverage, with rates starting at just $16/mo.

How Do I Get Life Insurance?

In the past, getting life insurance was a major pain- all the paperwork, medical evaluations, appointments, etc- so it’s understandable why someone would want to put it off. But now there are companies that will give you a quote in seconds and an answer in minutes… and you don’t even have to leave your house.

One of the companies, Bestow, doesn’t even ask for your name before giving you a quote, and if you like the rate, you can find out if you qualify in about 90 seconds

… all from your phone. 

There are lots of life insurance companies, but we like Bestow because they offer quick, easy coverage for busy young professionals looking to advance lives. In about 90 seconds, you can see if you qualify for $50,000- $1,000,000 in coverage. And with most plans starting around $.50 a day, this peace of mind is within budget for almost everyone. 

Who Needs Life Insurance? 

If someone is financially dependent on you, you need life insurance. If you were to suddenly die, you wouldn’t want to leave that loved one without the income needed to maintain their lifestyle, or burden a child’s future caregiver with the cost of raising him or her to adulthood.

Starting with the most obvious, parents need life insurance, at least until their son or daughter is 18, or through college. A 2020 study estimated the cost of raising a middle-income child to be approximately $233,610… a price most people couldn’t afford to assume if they suddenly had to raise your child. A life insurance policy would provide a surviving spouse- or the designated caregiver- necessary money to help comfortably raise your kid(s), while making sure things like sports, braces, and vacations are covered.

But what about if you don’t have a kid… do you still need life insurance? The simple answer is maybe. If you’re in your late 20s and married, but no kids, you might want to consider a policy if you’ve just bought a home together, to ensure the surviving spouse would have enough money to pay the mortgage, because many couples pool their income to pay household bills, and a single income may not be enough to cover the monthly expenses.

If you’re young, healthy, and unmarried, you likely don’t need life insurance, BUT…. if you have debt that’s cosigned by someone, you do. OK, pretend you took out student loans to go to college, and your parents cosigned on them. That essentially means they guaranteed the lender they’d get their money back. But if you die, then your parents are now exclusively responsible for the debt. A life insurance policy would give them the money they need to pay off the loan without depleting their savings or forcing them into financial hardship.

Why do I Need Life Insurance? 

Life insurance provides a financial “safety” net to those left behind when you die. We’ve covered that it makes sense for the main earner in the household to buy life insurance, but who else should have it?

Business Owner– The death benefits paid out from a life insurance policy could help pay off business debts, help your family pay estate taxes, or provide your family with the cash so they have the option to buy out a partner’s portion of the business.

Divorced Person- A life insurance policy would provide you with the needed cash to make payments required for alimony or child-support.

High Net-Worth Individual– Depending on the cost of a premium, it may make sense for a wealthy person to have life insurance, as a policy payout could help cover estate or inheritance taxes.

Mortgage-holder– A term life insurance policy that matches the years left in your mortgage could help cover those payments so the family doesn’t have to move or lose the house. 

Debt Cosigner– A life insurance policy can ensure the deceased’s cosigner has enough money to cover the loan. For instance, if a parent co-signs a student loan and dies, the life insurance payout could help cover the child’s loan and allow them to complete school.

Someone Who Wants to Leave an Inheritance– If you’re not wealthy, an insurance payout can provide a financial cushion to those you leave behind. Permanent/whole life insurance policies will pay money for an inheritance no matter when you die. 

Stay-At-Home Mom or Dad- Death benefits could provide funds to pay for childcare, if the parent who dies currently watches the kid(s) for free. 

The Difference Between Term and Whole Life Insurance

If you’ve seen the TV commercials or done any Google searching, you may have noticed that there are two different categories of life insurance, whole and term life. 

Term Life Insurance is a life insurance policy that provides coverage for a specified amount of time, or term. The amount of coverage, the monthly premium, and duration of coverage are fixed. Term life insurance doesn’t provide any cash value, and if you fail to pay the monthly premium, the coverage will lapse. On the whole, term life insurance plans are less expensive than whole life insurance and a better choice for most people.

Whole Life Insurance is life insurance coverage for a policy holder’s entire life, not just a specified term. Because coverage is for life and there is an investment/cash component to a whole life policy, it’s more expensive than term policies and likely is not as good a choice for most shoppers. 

How Much Does Life Insurance Cost? 

Like everything from groceries to hotel rooms, the price of life insurance depends on factors like age, health, lifestyle, and coverage, but plans can be surprisingly affordable. For instance, one company, called Bestow, offers plans starting at just $16/mo, and the offer coverage up to $1,500,000. Just think what your family could do with $1.5 million dollars?