YOUNG & HEALTHY

Think you’re too young for life insurance?

It’s often stated that you need life insurance if someone depends on you financially.

It doesn’t really matter who that “someone” is—it could be a spouse, or a child, or a parent, or a sibling.

Whatever the case may be, if there’s at least one person in your life who relies on you and your income to survive, you should strongly consider purchasing some form of, and some amount of, life insurance coverage.

Which goes a long way toward explaining why it’s also often stated that young people—with Millennials and their slightly older cohorts being perfect examples—don’t really need to concern themselves with life insurance.

This is especially true when the young people in question are single, or are married but don’t have children, or otherwise don’t have anyone in their lives who would suffer financially if they were to pass away.

Sure, there are circumstances and situations where a young person could feel completely justified in forgoing life insurance. But there are just as many situations and circumstances that can serve as examples of when someone less than 35 should buy a life insurance policy.

Here are a few cases in point: When Young People Should Buy Life Insurance

You have one or more “dependents”...

The biggest reason to buy life insurance is to make sure anyone and everyone who depends on your income for survival will be provided for financially after you’re gone.

Whether you’re single or married, or whether you’re a parent to any children or none, “if you have someone [who is] financially dependent on you… you need life insurance.”

While most people think of “financially dependents” as spouses or children, they’re just as likely to be live-in boyfriends or girlfriends with whom you own a house. But they can also be siblings, or aging parents or grandparents.

Getting married, having children, and buying a home shouldn’t be the only triggers that push you to shop for or buy life insurance.

If you’re responsible for anyone’s care, you have to think about what will happen to that person or those people if something should happen to you?

Something else to keep in mind here is that your parents or grandparents don’t currently have to be relying on your income for you to cover them with a life insurance policy. So, if you think either of those relatives may find themselves in some sort of long-term care setting in the near future, investing in life insurance could provide you with some peace of mind that those loved ones will be taken care of should you pass away.

With very few exceptions, the younger you are when you buy a life insurance policy, the less you’ll pay.

Although hundreds of factors determine life insurance premiums, age is one of the most critical components, and it makes a strong case for buying life insurance as early in life as possible.

Whole life insurance vs term life insurance

Confused about the difference between whole life insurance and term life insurance? You’re not alone; people often struggle to choose which is right for them, and sometimes even switch from one to the other. Before you make that choice, make sure you know what’s what.

Whole life insurance 

  • Tends to be more expensive than term life insurance.

  •  It incorporates a cash value element (which contributes to the higher cost) that you       don’t get with term life insurance. What this means is that as you pay insurance premiums, some of what you pay is available to borrow against or cash out during your lifetime.

  • Because they’re designed to provide stability, they became popular after the financial crisis in 2008 to 2009.

  • You can withdraw most or all of what you put into it tax-free, but:

  • You must follow strict rules associated with payments and if you don’t, you can end up owing a lot in taxes.

  • Whole life insurance offers level premiums and life insurance protection for life (but again, as long as the premiums are paid as your insurance requires).

  • When you buy whole life insurance, your insurer deposits your premium (minus insurance costs and other expenses) into a cash value account.

  • For that reason, whole life insurance can provide the accumulation of cash value (tax-deferred), and you can use it when you need it.

  • Whole life insurance comes in three types: traditional, variable and universal.

                     

Term life insurance

1.Term life insurance is simpler and works like your car or home insurance.

2. With term life insurance, you pay premiums either every month or every year, and your family is protected for that term — for example, 20 years.

3. Common uses for term life insurance are: helping provide for a family’s loss of income, covering short-term debts and needs, providing additional insurance protection during the child-raising years, providing longer-term protection to help pay off a mortgage, or to help pay for a college education.

4. Term life policies tend to be fairly inexpensive for healthy people under 50.

5. So called return of premium term life insurance will return some of your premiums at the end of the term. These policies are generally more expensive.

 

Healthy = FAVORABLE RATES!

If there’s one factor that’s more important than age in determining an applicant’s life insurance risk, it’s health. Statistically speaking, a person who is in excellent health is considerably less likely to see an early death than one who is in poor health. This is why life insurance companies pay particular attention to your medical history when underwriting a policy and why life insurance premiums for smokers can be substantially more. But even your health is at least loosely related to your age. Since most diseases and impairments tend to develop later in life—typically more toward middle age—excellent health and youth are closely connected.

 

At least part of the reason why you should get life insurance when you are very young is so that you can get it before any chronic health conditions develop.

For most people, the ideal time to buy life insurance is when you’re in your twenties.

 

Though that may seem young, chronic conditions like high blood pressure and cholesterol often begin to show up after age 30.

If you can get your life insurance policy before any these conditions develop, you’ll pay substantially less in premiums.

 

The fact that you are young and healthy will not only keep the premiums low, but it will also enable you to buy a lot more insurance coverage than you may be able to a few years down the road when you actually do have dependents.

 

In addition, the possibility that you may develop health conditions at about the same time you have a family can never be ignored. It will result in permanently higher costs for life insurance should that happen.

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