When Should I Buy Life Insurance
Life insurance should be thought of as a way to offset financial liabilities should the worst happen. Whenever you have a life event that adds financial responsibilities, it’s a good time to consider acquiring coverage or adding to what you have today. Let’s take a look at what some of those life events might be.
When you get married, you start making financial decisions based on your combined income. You may be a dual-income household, or perhaps only one of you works outside of the home. If something happens to either one of you, the other spouse would likely not be able to maintain your current lifestyle without either the other income or the household and childcare help. Life insurance can be a way to offset this.
Having children means high hopes for their future. For many, this means the ability to send them to college. However, if one or both parents weren’t around to provide this support, it may make going to school difficult financially. Life insurance can be a way to make sure the money is there for this important aspect of your child’s future should you not be there to help pay for it.
Buying or Upsizing a Home
Buying a home is a way to put down roots. It’s generally a long-term commitment that comes along with a mortgage. Most families buy because they want their family to establish memories in a particular area and live a certain lifestyle. Again, this might be difficult to maintain on a single income. Whether you are purchasing your first home or upsizing, it’s a good time to look at your coverage.
Getting a Big Promotion
When there’s a big change in the amount of money coming in, it’s a good time to revisit your coverage. As much as we all like to think we’ll maintain the same lifestyle on a larger salary, the reality is that we tend to increase our expectations and financial commitments. Perhaps you buy a bigger house or a new car. These are new financial obligations and income that your loved ones will come to count on. Increasing your coverage can make up this gap.
When You’re Young
Life insurance premiums are based on age at entry and that means the sooner you buy, the less you’re going to pay. With policies that have 10 or 20 year terms, the savings to you could be substantial. Another reason to buy young is that you never know what your health situation will be when you’re older. Health issues may crop up that make securing coverage at an older age difficult or more expensive.
In short, whenever you have life circumstances that either add to your income or add to your financial obligations, it’s a great time to review your coverage. Don’t forget about looking at your beneficiaries at the same time.