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Are you too young to buy life insurance? If you are earning your own living and can afford it, the answer is probably no.
Consider the most obvious reason for buying life insurance at any age: you have clear insurable interests that would be threatened by a catastrophic accident. For example, at 30 you may have student loans or other debts you incurred with the help of a co-signer, as yet unpaid. Should you die, someone else in your family might be stuck with that obligation. Life insurance is a straightforward way to prevent this.
Another reason? You may have a spouse and child who rely on your income. Insurance will likely protect them in the event of a misfortune.
Age 30 is Practically Perfect
Another consideration: you may be the stay-at-home caregiver in a household, on whom a child or elderly parent depends. In such a situation, your death would mean that alternative arrangements would have to be made to care for those people, and you have an insurable interest in making those arrangements affordable.
Strangely, age 30 is practically the perfect time to get life insurance. The reason? The premiums are the lowest for the young and healthy.
For example: a 30 year old non-smoking male in good health may be able to get a 30-year term life policy with a death benefit of $500,000 for just $29.87 a month. The same policy could cost a 40-year-old man, also a non-smoker and also in good health, $46.87. So buying ten years earlier amounts to getting a premium discount of 43%.
Online insurance calculators will allow you to calculate for other scenarios. You will find that those ten years make a big difference in any hypothesis where the other factors are held constant.
Whole Life Insurance Has Pros and Cons
If you’re between 30 and 40 you could benefit from whole life insurance because it has an investment component.
Whole life insurance involves the accumulation of cash value over time. Nonetheless, it probably is not a good idea to buy whole life specifically for the investment value. Buy it if you have an insurable interest that merits it, consider the cash value a fringe benefit.
It is possible that you’ve hit the maximum on your IRA and your retirement plan, and you are looking for another tax-deferred savings opportunity. In that case, whole-life insurance might do the job. But, in general, whole life insurance is not the best investment.
Among their disadvantages, whole life policies cost between five and 15 times more than term coverage with the exact same death benefit. Because of this, a June 2016 study by the Wharton School at University of Pennsylvania indicated that a quarter of whole life policies lapse within the first three years.
There are pros and cons, but there is a significant cost differential that should be considered when deciding.
Companies Have Plans … Ask!
It is possible that you have, or that you may be able to obtain, life insurance through your employer, in what is known as group life insurance. This is worth consideration. It may well be part of the regular employment package or offered at a very low expense.
It may also be flexible. You may be in a position to buy additional coverage if you want a death benefit amount in excess of the standard group benefit. On the other hand, you may not have that job forever, and the insurance you are offered through your employer may not be portable.
Too young for life insurance? Nine times out of ten the answer is no – especially if you have dependents.