Thinking about taking out a life insurance policy can be uncomfortable as no one likes to ponder the thought of dying prematurely. However, purchasing one at the perfect age helps prevents any surprise major financial burdens for your family, such as your funeral expenses, when your time finally comes. Moreover, it also means you have the most options available at lower rates than if you waited past a certain age.
Types of Life Insurance
First of all, before even considering taking out a life insurance policy, it's best to understand some basic types available. First, term life policies only offer coverage for a set period, such as 10 or 15 years, and these may be suitable for older individuals, especially because the younger you are, the more likely you are to outlive a short-term policy. At the same time, term life policies may feature a convertible provision so that you can opt to convert it into a permanent policy to benefit from coverage until your death.
Next, whole life insurance is a type of permanent policy that features an investment component, so this means that you can build up the cash value of your policy without paying any taxes whatsoever. However, commissions, surrender charges and built-in fees may take away from a portion of your investment. Moreover, premiums are typically up to 10 times than that of term insurance, so it's best to be cautious. Therefore, whether you choose term or permanent depends on your specific financial and family situation. For example, if you have a disabled child who may be financially dependent on you for their entire life, purchasing a permanent policy in the first place may be a better option.
Waiting Too Long
Even if you're extremely healthy and have been your entire life, there is no way of telling what could happen. For instance, just because you're not at a high risk for cancer based on your family's medical history, a car crash could very well happen and take your life. If we knew when we would die, life insurance policies would not be on the table or exist at all. Thus, the point is that life insurance policies is a part of financial planning, and you shouldn't necessarily wait until later in life when you're at a higher risk of dying.
The Best Age to Take Out a Life Insurance Policy
Depending on the type of life insurance policy you want or need, you have a couple of options. In general, you should purchase life insurance at the age of 30. This is because the cost of insurance would still be relatively low, depending on your health. Keep in mind that a 30-year policy will no longer be available once you reach 59. At this point, you can take out a policy for 10, 15, 20 or 25 years. However, 30-year coverage premiums are available beforehand so don't miss your chance. Similarly, 20-year policies are no longer available once you reach 75. Therefore, if you need some coverage but not too much, you should not wait until then to do so. Overall, taking out a life insurance policy at the age of 30 is the best way to ensure you can get any type of policy without facing major issues.