Is life insurance right for you?

Whether or not to purchase life insurance is one of the more surreal financial questions adults face. No one wants to confront mortality head-on, let alone spend money on something that only becomes useful once they’re gone. But life insurance is one of the most selfless investments a person can make. 

Knowing if and when you should purchase can be a somewhat tricky decision to navigate. According to Investopedia, the optimal age to purchase life insurance is any time under 35. This is a decent rule of thumb. However, the decision really comes down to various life circumstances such as your number of dependents, how much wealth you have and your tolerance for risk. And while this post can provide some guidance, the best way to know for sure is to contact a financial expert.  

Bank Midwest Life Insurance Blog Illustration, "Investing in life insurance before age 35 can lock in lower premiums and ensure security for young families."

Family changes everything

Life insurance is an afterthought for people in their 20s and 30s who are young and healthy, which is understandable. But there’s a benefit to investing in a policy at these ages for anyone who knows that they want to have children, and wish to leave some money for college and other expenses in the event of an untimely passing. Generally, the younger you are when you purchase your policy, the lower your premiums.

Term Life Insurance

If you’re signing up for term life insurance (which means the insurance needs to be renewed after a certain number of years) those premiums are locked-in for the life of the policy. Terms usually last 10, 20 or 30 years.

Let’s say you’re 30 and plan to have kids soon. In that case, signing up for a 30-year policy would lock-in your premiums for the next 30 years. At 59, you would be paying the same amount per month as you did at age 30. 

The tradeoff is that the starting average premium for a 30-year policy is a little more than say, a 10-year policy, precisely because you’re locked in. You also don’t necessarily know how much your life circumstances will change in 20 or 30 years – what types of new expenses you’ll incur, your income, inheritances, etc. In the long run, though, there’s a good chance that a 30-year term will be cheaper than three consecutive 10-year terms. 

Whole Life Insurance

A whole-life policy, meanwhile, lasts until you pass away presuming you continue paying premiums. Your premiums are locked in, which is ideal, and it has the added benefit of being able to extract cash from the value of the plan.

In summary, signing up for a life-insurance policy (whole or term) sooner rather than later can help you lock in lower premiums. If you have dependents such as children, a spouse or parents you’re caring for – and lack significant wealth – it may be in your best interest to purchase a policy even if you are relatively young. Should anything happen to you, you have the peace-of-mind to know that you’ll leave your loved ones with the financial means to settle any remaining expenses, cover the costs of a funeral and have some money left over for the future.

If you do need insurance, how much do you need?

There are many types of life-insurance policies. For instance, some people sign up for a final expense policy later in life that would cover the cost of any personal financial obligations (debt, for instance) as well as funeral expenses.

In the traditional term or whole policy, you pay premiums so that if you meet an untimely end, your family gets a payout. You can estimate the value of that payout by trying to calculate your financial obligations. This is hard to do. There’s some math involved in life insurance and many factors can influence your policy. 

For now, your best course of action is to request a free quote. Reach out to an experienced Bank Midwest Insurance agent to discuss what’s right for you.

Don’t wait to start thinking about life insurance. The sooner you consider your options, the more choices you’ll have available to you.

‹ Return to the Blog