When should you take out a life insurance policy?
Most people don’t like thinking about life insurance, let alone taking out a policy. However, most people need it. Preparing for the future by taking out a life insurance policy doesn’t have to be daunting.
What Is Life Insurance?
Life insurance is a policy with a life insurance company that is paid into by an individual. Upon the death of said individual, the life insurance company pays out a predetermined amount. Usually, the monies are paid to a benefactor that was previously named on the policy.
The two main types of life insurance are term life and universal or permanent life. Term life insurance covers a finite amount of time in a person’s life and is often the cheaper of the two. Payments are typically the same every month with a designated payout amount. Universal life insurance is designed for lifetime coverage. This type of policy is usually more expensive but often allows for changing monthly payments and coverage amounts.
Who Needs Life Insurance?
Most everyone needs life insurance, but homeowners should have a life insurance policy to cover any remaining mortgage after they pass away. Business owners also ought to invest in life insurance to help pay off debts when they are gone and to help keep their dream alive. Likewise, anyone who has co-signed a loan could benefit from a life insurance policy, to cover the cost of debt.
Many people think of life insurance when they have children, so their children are taken care of financially should they pass away unexpectedly. Whether considered the breadwinner or stay-at-home parent, both scenarios would benefit from a policy.
When To Get Life Insurance
Age should not be the deciding factor to when life insurance is needed. Rather, life’s circumstances or where someone is in their life should be the main consideration. You may only be in your early 20s, but if you are starting a family, life insurance would be a good idea. On the other hand, if you are in your 30s, renting and do not have any children, life insurance may not be necessary yet.
The longer you wait to obtain life insurance, typically the pricier it gets. Some policies require a health exam before coverage is issued, and some companies may deny coverage based on pre-existing conditions.