When do I need term life insurance?
- Any major life event—getting married, buying a home, changing jobs, having a child, paying for college expenses—is an important time to think about protecting your family with life insurance.
- Forgoing life insurance purchases at a young age can be costly over the long term. The average cost of a 30-year level term policy with a $100,000 face amount is about $156 per year for a healthy 30-year-old male. By contrast, the annual premium for a healthy 40-year-old male is about $216. For a healthy 30-year-old male, the overall cost of delaying the purchase for 10 years sits at $1,800 over the life of the policy.
- Additionally, the cost of waiting to purchase life insurance can have a greater impact on an attempt to purchase a policy later in life. Medical conditions are more likely to develop as an individual grows older. If a serious medical condition arises, a policy can be rated by the life underwriter, which could lead to higher premium payments or the possibility that the application for coverage can be declined outright.
- The optimal age for purchasing life insurance is technically right after birth. Life insurance is age-banded, which means that as each year passes, a policy becomes more expensive. There are arguments for and against a parent or relative purchasing life insurance policy for a newborn. Most people choose to buy term life insurance to protect their family’s financial security if the major breadwinner in the family dies. Therefore, most people consider buying term life insurance after a major life event.