What Are The Benefits of Purchasing Life Insurance Early?

Life insurance is a contract between an insurance company and a customer, under which the insurer agrees to pay death benefits to the family of the insured in the event of the latter's passing. Therefore,  the insurance company is obligated under this contract to provide financial protection to the customer's family in the case of the insured's untimely death.

Unexpected events can, unfortunately, occur at any time, regardless of your age, health, or wellbeing. Therefore, financial experts strongly advise buying life insurance at much younger ages even though the risk of passing away at younger ages is lower than at older ages. Experts highlight different reasons why it is necessary to buy life insurance when we are young. Now, let's examine the main reasons for buying life insurance earlier, discuss the benefits of doing so, and decide whether we need to purchase it now or not.

The Cost of Premiums

The very first reason to purchase life insurance coverage at younger ages is the cost of the product.  In general, the cost is determined by a number of variables, including the customer's age, health, and lifestyle habits. As the risk of developing health problems or chronic illnesses rises with age, monthly premiums are significantly more affordable for younger clients than for older ones. Younger clients are, therefore, more likely to get lower rates from insurance providers and ultimately pay significantly less over time. This is because if the contract is signed earlier, the lower premiums stay the same during the entire term of the insurance policy, helping to save thousands of dollars.

Financial Security

According to a recent survey, 75% of Americans believe that life insurance is an essential component of a financial plan. Thus, more people are prioritizing life insurance in their financial planning. The sudden passing of a young wage-earner of the family, leaving the surviving family members unable to make ends meet, is a major concern for many Americans. By acquiring life insurance coverage, the insured can have peace of mind that his dependents are financially protected in the event of his untimely passing away. The agreement between the insurance company and the customer guarantees the delivery of financial security at the precise time when it is required.

Accumulating Cash Value

There are subtypes of life insurance that come with a cash value,  an investment component that grows tax-free over the course of the policy's life. Cash value usually doesn't start to build up until 2 to 5 years after the contract was signed. Thus, a younger age at which you purchase life insurance provides your policy more time to build cash value, which can be utilized to add to your retirement funds or serve as a source of emergency finances.

Bigger Death Benefit

The sum of money that is provided to your beneficiaries in the case of your untimely passing is known as a death benefit. Your money has a longer time to grow when you purchase a life insurance policy while you are young. In comparison to buying the same policy at an older age, you might be able to get a higher death benefit if you buy life insurance when you're younger.  Because of this, investing when you are in your twenties will increase the death or maturity benefits your beneficiaries will receive at the completion of the policy's term.

Debts

If you have loans, mortgages, or other debts during your lifetime, life insurance can pay for them all after your untimely death, relieving the financial stress of your loved ones. Furthermore, if you have co-signed a loan, your co-signer will be responsible for the whole debt after you pass away. Thus, if you select your co-signer as the beneficiary of your life insurance policy, the latter will pay off the whole debt, protecting the co-signer from financial burden.

About the Tests that are Better to Undergo at a Younger Age

Insurance companies design tests or so-called medical exams to assess the customer's health and determine the amount of monthly premiums in order to spot potential health risks. These tests often consist of blood pressure checks, cholesterol evaluations, diabetes and cancer screenings. It is not a secret that as people get older, their susceptibility to health issues increases. As a result, getting health checks and screenings earlier in life may be better than delaying until later years when health problems may already be present. Good health can lead to lower monthly premiums for your life insurance.

Additionally, getting a checkup when you're younger can help you identify any early-stage health problems, enabling you to take preventative measures or seek treatment before the condition gets worse, potentially improving your overall health outcomes.

The Real Cost of Delaying

Let's now conduct a small mathematical analysis to determine the cost of delaying the purchase of life insurance till later in life. For a healthy 25-year-old individual, the average cost of a 20-year level term policy with a $250,000 face value is roughly $205 per year. A 45-year-old male's annual premium, in contrast, is around $421. Delaying the purchase for 20 years will result in an overall expense of $4,320 throughout the course of the insurance.

Make a Wise Decision

The ideal time for each of us to buy life insurance depends on our families and, of course, our financial situation. However, financial advisors highlight the importance of getting life insurance at a young age. As previously mentioned, buying life insurance early in life can have a number of advantages, including possibly lower rates and security for surviving family members in the case of an untimely death. Besides, the earlier you purchase life insurance, the more money you'll save.