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When should I buy life insurance?

by Sam Stilson
6 min read

Choosing a life insurance policy is a big decision. And like most important decisions, people tend to avoid considering when to buy life insurance for as long as possible. Whether it’s a fear of commitment driving that trepidation (just saying, the average age for newlyweds has been trending up for decades) or confusion about the value of life insurance (only 16 percent of Canadians feel they truly understand life insurance products) more and more people are putting off purchasing coverage. Our survey suggests 20% of those that have put off insurance decisions did so because they didn’t understand it.

But is that a risky move? Can you wait too long to buy life insurance? Or is it possible to get coverage too early? When is the right time to buy a life insurance policy?

When is the best time to buy life insurance?

Conventional wisdom in the insurance industry says that you should get life insurance coverage as early as possible when you’re young and healthy.

Insurance companies offer cheaper quotes to younger people because they carry less risk to insure due to the fact they are less likely to die.

The cost of premiums rise as you get older, so it pays to opt in early.

On top of that, most term policies offer level premiums which means you’ll pay the same amount every month (or another agreed upon frequency) for the length of your term – even as you age.

This ‘double whammy’ (not an official insurance term) means you can lock into a really low rate for a really long time (30 plus years potentially)! Needless to say, that’s a tempting offer. If your internet provider offered to lock you in at ‘new-customer-pricing’ for the next quarter century, you’d leap at the opportunity.

Securing a life insurance policy in your early 20s is also recommended because of another common term life insurance feature called guaranteed renewability. This protects you from declined coverage when your term is up for renewal because of any health conditions you may have developed since you first purchased your policy.

For example, let’s say you don’t buy life insurance and you end up with high cholesterol and diabetes at 40, and decide you now want coverage. There’s a chance you’ll get declined by some insurers who will consider you too high a risk. However, if you already purchased a 20-year term policy (with a guaranteed renewability) at 20 and developed those same ailments, you’ll be guaranteed the opportunity to renew your coverage This is a great way to hedge your bets against the unforeseen.

Do I really need life insurance?

Everyone knows the old saying, “you don’t know what you’ve got ‘til it’s gone,” (thanks Joni – or if you were born in the ’90s, thanks Counting Crows). An equally apt – but way less catchy – expression holds just as true “you don’t think you need things until you really need them.”

If you’re trying to figure out the best time to buy life insurance, ask yourself the following questions:

Do I need life insurance?

If you answered yes to any of those questions, take a minute to stop hyperventilating. Ok, you’re good? Now start looking into buying a life insurance policy.

Life insurance might seem like an unnecessary expenditure when you’re young, broke and independent but once that’s no longer the case, the need for it becomes apparent. Life insurance is designed to protect those who are financially dependent on you should you die. Whether that’s your newborn baby, your business partner, or your long-suffering spouse, they’re the ones hindered by this sudden loss. That’s a big risk to take for people who count on you.

We’re not trying to scare you, but take a minute and think about what would happen if you died tomorrow, strictly from a financial perspective. Can your spouse handle your mortgage payments? Who would pay off your credit cards? Can your business partner keep your company afloat?

How much life insurance do I need?

If you feel like the people in your life would be in a tough spot without your income, then you’ll probably want to get insured sooner than later regardless of your age. Concerns about premium costs can come secondary to ensuring you’re covered for an appropriate amount to match your financial situation. Not sure how much your family would need? Use our quick and easy life insurance coverage calculator for an honest assessment or read our honest guide to life insurance for answers to many questions that first-time life insurance buyers have.

Timing is everything when buying life insurance

Choosing the right time to purchase life insurance can be frustrating. No one wants to pay for coverage they don’t need, but peace of mind can outweigh the value of a dollar depending on your risk-aversion. Either argument is financially prudent, so it’s natural to feel conflicted.

Ultimately the decision is personal but should be influenced by those who depend on you.

Term life insurance is not a personal savings plan nor a roulette bet, it’s an investment in the financial security of the people in your life.

If needing that security is a possibility – whether you’re 22 or 42 – now’s a good time to take cover.  But don’t worry, we can help you find the lowest rates for the best coverage using our insurance comparison tool.

Did you find this article helpful? Read our next in the series on how much life insurance you need.

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