There are plenty of reasons to have life insurance, but when is the right time to take out a policy? Every day you’re without cover, you run the risk of leaving your loved ones financially unprotected if anything happens to you.
But life insurance is not one-size-fits-all. The right time for you will depend on your personal circumstances. In this post, we’ll look at some of the key moments in life where you may need life insurance cover.
Why does it matter when you get life insurance?
Two of the biggest impacts on the cost of life insurance are age and health. In most cases, premiums are at their lowest when you are young, as there is less risk of you developing a health condition.
If you wait till you’re older, your premiums may be more expensive, even more so if you have been diagnosed with a medical condition. You may not have dependants when you are young, but buying cover early can save you money in the long term.
There are also specific stages in life where having cover can provide crucial financial protection for your family or dependents. For example, you may need cover when your children are young, but once they’ve grown up and are no longer dependent, not so much.
When you get married or start a family
For many people, getting married or starting a family is the point when life insurance becomes essential. If your partner relies on your income, or you share financial commitments such as rent or a mortgage, life insurance can help ensure they’re not left struggling if something happens to you.
Having children adds another layer of responsibility. From everyday living costs to childcare, education, and long-term security, your income is crucial to the household. A life insurance payout could provide vital support to cover unexpected expenses and give your loved ones financial stability at a difficult time.
Even if both parents work, the loss of one income can have a huge impact. Life insurance provides peace of mind that your family’s future is protected, no matter what.
Policies like joint life insurance are great for couples who share finances. It pays out if one of you dies or after you’ve both passed away. The payout can be used to help either spouse take care of their family. It’s often cheaper than buying separate policies.
When you have a mortgage
A mortgage is often one of the biggest financial commitments people make in their entire lives. Having one gives you all the more reason to be protected. If you were to pass away before the mortgage is repaid, your loved ones may struggle to pay off the remaining balance.
If your family cannot pay the remaining balance, they may be forced to sell the home and move out during an already difficult time. The same applies if you live in a rented property, in which your family may not be able to cover the full rent alone.
Policies like decreasing term life insurance are specifically designed to cover debts like mortgages. The cover amount usually matches the remaining balance on your mortgage. As you make repayments, the payout decreases to stay in line with the reducing debt. So, if the worst happens, your family has the support they need.
When you change jobs
Some people are offered life insurance through their employer, often as part of a benefits package. While this cover can be useful, it may not provide enough protection for your family.
The payout is often based on a multiple of your salary, which might not be enough to cover long-term expenses like a mortgage or raising children.
There’s also the fact that if you change jobs, you may lose that cover altogether. In this case, it’s worth taking out your own policy so you remain protected, no matter where or how you work.
After a divorce or major life change
Big changes in your personal life are a good time to review your life insurance policy. Divorce or separation, for example, can suddenly impact who relies on your income and who should benefit from your cover.
You may need to update the amount of cover you have or change the named beneficiaries. In some cases, you might want to take out a new policy so it reflects your newfound situation and responsibilities.
Nearing retirement
You might think life insurance is only for younger people, but that’s not always the case. Even as you approach retirement, there are situations where a policy could be useful. For example, you may want to leave a lump sum to cover funeral expenses, help pay off outstanding debts, or even reduce inheritance tax for your family.
That said, getting cover later in life does have its downsides. Premiums tend to be higher, and your health is more likely to affect your application. Some insurers may even limit the type or amount of cover available.
If standard life insurance isn’t practical, there are alternatives like over-50s life policies that still provide some protection and peace of mind.
Is it the right time?
There’s no perfect age to buy life insurance, but one thing is certain – waiting often makes it more expensive and sometimes more difficult to get.
If you have people who rely on your income or support, or if you want to lock in a low premium while you’re healthy, then there’s no reason not to get cover.
It also comes down to peace of mind. If you’ve ever thought of what would happen to your family if you weren’t here tomorrow, it may be a sign it’s time to get cover.
If you’re unsure how much cover you need or what type of policy is right for you, speaking to a life insurance adviser can help. They’ll guide you through your options so you can find the right cover at the right time.
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