When is the Right time to Purchase Life Insurance?

Life insurance is something that can provide you and your family with a sense of security. But while many people have decided they want to purchase life insurance someday, knowing the right time to actually purchase it is another milestone.

There isn’t a single universal age that everyone should decide to purchase life insurance. Whether or not life insurance makes sense for you is going to depend on a number of different factors that are uniquely your own.

There are, however, several different reasons to consider investing in life insurance as soon as you feasibly can.

right time to purchase life insurance

Your monthly premiums are likely the lowest they will ever be in your life.

Typically, the total cost of your life insurance policy will be distributed over time in the form of monthly premiums. But even if two people are applying for the exact same benefits package—say, $100,000 in coverage over the course of ten years—they won’t necessarily be paying the same monthly premiums.

Monthly life insurance premiums are determined by several variables. Generally, these variables are different indicators of how much longer you are predicted to live. Individuals who are believed to have a longer amount of time left to live, naturally, will end up paying lower monthly premiums.

By purchasing life insurance at a younger age, you will be able to pay lower monthly premiums for the remainder of your life. Because of this, many financial advisors will tell you that if you can currently afford life insurance, then it is something you may want to seriously consider investing in.

Some people claim that you should wait until you have a financial dependent—either a spouse or children—in order to purchase life insurance. But even if you are currently independent, if you plan on changing your status in the future, locking in a low monthly rate while you are young may still be financially worth it.

Life insurance can lay a foundation for your overall financial portfolio.

As soon as you begin to have any sort of excess monthly income, it is important to think about where you want to store your money. When it comes to the complex world of financial assets, you are inevitably going to have a lot of choices.

Naturally, the first place you may think to protect your money is probably a bank. Though deposits in banks (under $250,000) are insured by the FDIC, the interest rates that most banks offer are usually pretty low. But instead of having their money “sit” passively, many prefer to have it actually work for them to provide additional value.

Stocks, bonds, life insurance, and real estate are just a few of the options that many people consider when starting to build their portfolio. Naturally, each of these assets has a wide variety of pros and cons associated with them.

There are a lot of different philosophies one could take when building a financial portfolio. One of the most common—and most time-tested—philosophies is to begin by investing in “safe” assets and gradually increase risk as you accumulate wealth.

Life insurance is considered by many financial advisors to be an incredibly safe investment. As long as you choose a reliable company, it is very unlikely your policy will not pay out the benefits once they are actually due.

Because life insurance is considered so safe, it is often considered to be an excellent foundation for a financial portfolio. Even if you are young, purchasing life insurance can help you achieve your top financial priority (security) and allow you to then move on to helping your portfolio grow.

Approach investing with an opportunity cost mindset.

Ultimately, when you are deciding where to invest your money, the most important thing for you to think about is the opportunity cost.

Every dollar you spend somewhere is a dollar that could potentially be spent somewhere else. So if you are going to purchase life insurance, you are going to want to be confident in the fact that it is the best way for you to spend your money.

Spending an additional few dollars every month for financial security may not have the glamour of making it big in the stock market. But knowing that you are protecting those who matter to you most can really be worth it in the long run in this uncertain economic climate.

When you compare the benefits of purchasing life insurance—guaranteed protection for your family—to the speculative benefits of the stock market, the opportunity cost of not investing doesn’t seem so bad.

A well-balanced financial portfolio will be constructed in pursuit of both growth and protection. But if you can only choose one or the other, protection is something that obviously ought to be made your first priority.

A financial decision you will never regret

If you are considering entering the world of investing, there are obviously a lot of things you need to consider. But life insurance is one of the safest, most proven, and most beneficial investments you could possibly make.

You will always have time to invest in speculative markets. But taking care of your family for the long-term is something whose true value cannot be overstated. When it comes to investing in life insurance, it seems there could be no better time than the present.

Thank you for reading our article “When is the right time to purchase life insurance?”. If you have any questions, please leave a comment below.

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