Many people find it hard to think about life insurance when they are young, healthy, and financially secure. And, while there are many elements that factor into the choice to get life insurance such as a new marriage, children, and financial obligations, the best time to purchase life insurance is before you need it.  

Considering life insurance in your 20s and 30s is a smart move, because at this age most people are generally pretty healthy, giving you the option of a better rate. For example, in this age range, the average nonsmoker will only pay between $10 and $50 every month for a term policy (depending on coverage amount, of course). Even at the higher rate, that’s about one less visit to Starbucks every week — well worth the cost to protect your family’s finances. 

What is Life Insurance and When Should I Consider It?

According to the Insurance Barometer Report from 2020, there are at least 41 million U.S. consumers that admit to needing life insurance — and not having it. For many, the perception of life insurance’s high cost is what is holding them back from getting the protection they need for themselves and their families. For example, the Barometer Report showed that most people thought a $250,000 term life policy for a 30-year-old that was in good health would cost over $500 every year. But insurers not that the true average cost of such a policy is only $160 per year.  

So, What is Life Insurance? 

At its core, a life insurance policy is just a contract between you and your insurer. You pay a premium and in return, your insurance company agrees to pay a lump sum to your beneficiaries in the event of your death. Your beneficiaries can use this payment any way they choose — from paying bills to funding a child’s college education. In essence, this payment is meant to protect your beneficiaries from the financial crises that often accompany the death of an income provider.  

What are the Types of Life Insurance? 

There are two main types of life insurance — term and permanent. Term life is the most common — and the most popular choice due to its low cost. For example, data from Quotacy shows that for an average 40 year old, a 20 year term life policy with a $500K death benefit costs just $26 per month. Because premiums are based on life expectancy, the younger — and healthier — you are, the lower your premiums will be.  

In a term life policy, premium payments remain the same for the duration of the policy, which is typically written for periods of 10, 15, 20, 25, or 30 years. Once the policy expires at the end of its proscribed term, you can still renew each year although the renewal will be at a higher rate. 

Permanent life insurance, on the other hand, is meant to last for your lifetime and can be an investment vehicle as it builds cash value. The value will build on a tax-deferred basis as your policy matured and you can borrow against this value or even withdraw it. If you end the policy, you will receive any cash value that has built over time less a charge for surrendering the policy. Because these policies build value, they are more expensive than their term life counterparts.  

How Do I Know if I Need Life Insurance? 

If anyone relies on your income, you need life insurance. However, there are some life stages and significant events that should prompt you to begin thinking about electing a life insurance strategy. 

You are getting married. 

Getting married is a big step — and it means that you have someone who will affected by a loss of income. You can even opt for a joint life insurance policy if both of you are working or if you want to protect beneficiaries such as future — or current — children from paying estate or inheritance taxes.  

You have — or are going to have — children.  

If you are planning to have children or already have them, life insurance is critically important. If something happens to you, you want your spouse and children to be able to continue to live comfortably. Your policy should provide a death benefit that can cover mortgage expenses, burial expenses, future education, and other residual expenses or bills. 

You are self-employed. 

If your business supports your family, you may wish to consider a business-owned life insurance policy to ensure your family is protected in the event of your death.  

You have a high-risk job. 

Police officers, firefighters, and other individuals that engage in employment that can put them at risk of bodily harm should consider a strong life insurance policy. Even if you are covered by a group policy at work, you may need supplemental insurance to ensure your family has enough money to live on. Many group life policies do not generate enough of a benefit. Instead, consider getting enough coverage to add up to ten times your annual salary.  

You are a risk-taker.  

Do you scuba dive? Rock climb? Go white water rafting or spelunking? Then you may want to consider additional life insurance coverage. Not only do you want to get additional coverage, but you want to be sure to disclose your extreme hobbies to your insurance company, so you don’t risk losing your death benefit due to nondisclosure. Engaging in risky activities either at work or play means you may pay a higher premium, but your family will stay protected.  

Insurance Professionals Can Help You Make a Smart Choice

Let’s face it — every person’s life is different, and one size does not fit all, especially when it comes to choosing the right life insurance product for your needs. Policies should be examined in light of both tax benefits, tax implications, and your needs and the needs of your family.  

At M.J. Schuetz Insurance, our combined experience stretches over 200 years, so we are intimately familiar with a range of insurance products. Using our industry-specific knowledge, we can help you define your needs and challenges and find a cost-effective insurance solution that will keep your family financially secure. 

Importantly, our focus in on customer care and developing long term relationships for a positive, more secure future for our clients. We encourage clients to ask hard questions and expect solid, reliable advice.  Contact us today and we will help you — and your family — take those first important steps toward a more secure future.