When to Get Life Insurance – What It Is, Who Needs It and Where to Start Looking

It’s a general rule in insurance that the younger and healthier you are, the more affordable buying a policy might be. Most people find more affordable rates in their 20s or 30s. Basically, an insurer takes less risk when insuring a young person in good health. 

Nothing replaces a mom or dad, but a life insurance payout can give them the means to maintain their lifestyle and give you some peace of mind. Some policies even hold a cash value in case you ever need to access it before you pass.

If you already have a policy (maybe at work) it’s smart to evaluate if that meets your needs and keep in mind that you can’t take it with you when you leave that job. If you have no current coverage, today is a great day to start looking into it. Monthly premiums are almost always cheaper the younger and healthier you are when you purchase your policy. 

What Life Insurance Does

Life insurance is pretty simple – you pay a monthly premium and if you die, the insurer pays your beneficiaries the amount of the death benefit you purchased. But it can feel complicated when you start looking into coverage, because there are quite a few options out there.

If you were to die unexpectedly, your family could find themselves in a less than ideal financial situation. A life insurance policy can provide for funeral expenses or even multiple years’ income replacement. And that can mean your family stays in their home, gets to continue their education or just maintain their lifestyle.

Additionally, if you have private student loans, personal loans, car loans or other types of loans that are co-signed with a spouse or parent, they may still be liable for payment. Having a life insurance policy can mean you don’t leave anyone you love responsible for your debts.

The Different Types of Life Insurance

You’ll want to evaluate your life insurance needs, and even your budget for insurance premiums before choosing which type of policy is right for you.

Permanent life insurance might make sense if you’re looking for longer coverage, but term life insurance could be the better choice if you have a specific expense or life event you want covered.

There is typically a difference in price between the two because of the difference in benefits received.

There are also riders you can often add onto a policy, like a return of premium (you get back all your premium payments at the end of the term) or a child rider that lets you add minimal coverage for dependent minors to your policy.

Whole Life Insurance

A whole life policy is exactly what it sounds like. It’s permanent coverage that pays out on your eventual death. We all die, and unless contested, a whole life policy comes with a guaranteed payout. It typically comes with a significantly higher life insurance rate, however.

It’s a great option for someone who wants a policy that maintains a cash value they can borrow against in the future. 

Others sometimes choose a whole life policy as a way to transfer wealth to their children.

Term Life Insurance

A term life policy lasts a specific period of time, and then expires. Unlike whole life policies, they can be much more affordable. While the amount of coverage helps determine your premium, payments can start as low as $1/day with many insurers.

This is a great option for someone looking to provide for a child until they turn 18, pay off a mortgage so their family can stay in their home, or even a small business owner looking to apply for an SBA loan. And as with all life insurance, the younger and healthier you are when you purchase, the more likely you are to get a lower rate. Many people apply in their 20s even before they have children or own a home. 

Who Needs Life Insurance Coverage

If you’ve ever worried about how your loved ones would fare financially without you, you’re a good candidate for life insurance. People often experience a life event which spurs their purchase.

Many policyholders view life insurance as income replacement if they’re not around, while others treat their policy as a payment for something specific, like a home or education. Often people find that a life event triggers their need for life insurance, like:

• Getting married
• Buying a home
• Having a child
• Applying for a small business loan
• Organizing personal finances 
  

The Pros of Starting Younger

It’s a smart move to purchase life insurance in your 20s, even before you have dependents. That’s because waiting can bring higher premiums. Rates tend to go up as you get older and your health changes (with exceptions). But typically, people find their lowest rate when they’re young and healthy.

Start by getting some life insurance quotes, which will give you a ballpark of what you might expect to pay. You’ll get a real rate after underwriting (and sometimes a medical exam), which can often change from the quoted price. But this estimate can help you understand what you could pay.

If you’ve got coverage early in life, you won’t be dependent on a job for coverage. It’s not uncommon for people to take their work coverage for granted. It’s a nice perk, but it’s often less coverage than is recommended for many families. And if you leave or are terminated, the policy rarely follows you. And you could find yourself applying for coverage when you’re much older and your rate is likely to be higher.

The Cons of Starting Younger

If you don’t plan to buy a home with someone, get married, or have children, life insurance might not be right for you. Not everyone has a beneficiary, and a simple will in place to clean up your estate could suffice.

Individuals who cannot afford the cost of life insurance policies with a $1 million payout might be better served with a smaller policy – a $100,000 policy can help cover final expenses and some loss of income.

Buying Life Insurance

The best life insurance policy for your brother, your dad, or your coworker might not be the best coverage for your family, so it’s important to do a little research and consider your own finances and family’s needs before making a decision.

When looking for a life insurance company, keep in mind that not all insurers are equal. Lantern offers an online application, so you can apply, find out if you’re approved, and purchase up to $1.5 million in coverage, all from the comfort of your own home. 

With rates from just $11/per month and up to 30-year terms, Lantern is a smart choice for millions of families looking for life insurance.