It’s easy to put off thinking about life insurance. But stop and think: how would your family pay their bills if you were gone? Life insurance is the best way to make sure your loved ones are well taken care of, should the unthinkable happen – and so they won’t be left paying off your debts.
The Costs of Waiting
Consider the following figures from Policygenius:
- 5% to 9%: the average amount life insurance premiums rise each year you postpone buying coverage
- $214: the annual cost for a 20-year, $250,000 term life insurance policy for a healthy 30-year-old man
- $486: the annual cost for a 20-year, $250,000 term life insurance policy for a 40-year-old man
When it comes to life insurance, waiting to buy a policy actually makes it more expensive. It’s best to buy a life insurance policy at a young age. That’s because younger individuals qualify for lower premiums. Factors that go into determining a premium include:
- Age
- Gender
- Medical history
- Chronic health conditions
- Work hazards
- Risky hobbies
In fact, there are life insurance policies that fit nearly every age group, including policies parents can purchase to cover their children.
Deciding When to Buy Life Insurance
The older you get, the more likely you’ll have health problems that might make your life insurance coverage more expensive. Determining when in your life is the right time to buy life insurance can be difficult – especially for younger individuals who might be paying off college debts, trying to save up for their first home or welcoming children into their lives. Life insurance can be affordable – as low as $18 a month in some cases – and is important to consider as your life grows and changes. If you have family in your life that depends on your income, securing their financial future through a life insurance policy can give everyone peace of mind. Experts advise that if you don’t yet have a life insurance policy, reevaluate your needs every year or after major life events like getting married, having children or buying a home.
Types of Life Insurance
There are two main types of life insurance:
- Term life insurance offers coverage for a set term, typically 20 years or 30 years. Often, parents may choose a term that is based on how long their children will be dependent on their income.
- Whole life insurance offers coverage that will cover you for the rest of your life if you pay the monthly premiums. Each month a portion of the premium goes into the cash value of the policy, and over time can be used as collateral on a loan, for retirement savings or to pay off premiums.
A good general rule of thumb is that you’ll want a policy that’s worth seven to 10 times your annual income. If you have questions about life insurance, talk to your agent or to a Blue Cross Blue Shield of Michigan sales consultant for more information. More from MIBluesPerspectives:
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