Last Updated on May 20, 2021 by MoneyVisual
When you’re young, life insurance may not be a priority item on your bucket list. Perhaps you are keen on first paying off the student loans or you’re just saving for other investments in your life.
Nevertheless, the future is dangerously unpredictable and it can throw all kinds of risks. A smart way to prepare is, therefore, to plan before you leap onto the unknown tomorrow. So, where do you begin?
In this article, we discuss life insurance as a shield of safeguarding your future and that of your beloveds. We share below the reasons why buying life insurance for your family early is a smart choice.
Why Buy Life Insurance Early?
In the 20’s and early 30’s, a common financial burden that you’re likely experiencing is repaying loans. Perhaps, you applied for a student loan or you borrowed capital to start a business. Eventually, you have to refund the credit, which can be tough with other pending bills.
What’s more, not all lending institutions would write off the outstanding balance if you suddenly passed away. For this, those listed as your guarantors have to take over your financial burden. Or in worst cases, the lender will sell your property, which your family may still need for livelihood. Either way, this can double the hardship to those that you leave behind.
Taking a life insurance policy that takes care of loan repayments is your best option here. It covers any outstanding balance on borrowed money relieving your loved ones the imminent financial distress.
When you’re young, you may not have a permanent house but probably you hope to own one someday. A common and viable way to realize this dream is to acquire a mortgage, a housing loan that you repay gradually.
Like other credit services, delaying or halting repayment can have dire consequences. And as you know life risks, like a sudden terminal illness or death, may lead to this. With a family under the roof, a consequence such as reclaiming the house by the lender would be a big blow.
Luckily, you can use a term life insurance policy like mortgage protection to counter the effects of the unfortunate event. The insurer steps in to repay the outstanding balance on the housing loan allowing your family or other listed beneficiaries to retain your house.
Most life insurance policies cost less if you purchase them in your youthful years. Wondering why? Well, insurance providers consider young people to be healthier and at a lower risk of sudden death. Moreover, this age group has fewer financial burdens allowing insurers to charge lower premium rates for basic covers.
Besides, you can terminate the insurance contract without a significant loss in your youthful years than if you were older. And in the best cases, you may stumble upon providers that give discounts on premiums to younger people as an incentive. Therefore, if the primary determinant for a policy you want is age, buying it when young will have an affordability advantage.
Cover Your Burial Costs and Other Emergencies
If you were to pass away suddenly today, would your family struggle to afford the burial costs? More importantly, would they be able to lead a comfortable life after you’re gone?
If you answered no to either of the above questions, you might need to get yourself life insurance.
This coverage acts as some sort of saving account. You contribute to it by paying the premiums on a monthly, quarterly, or annual basis as directed by the terms and conditions. With money set aside, your loved ones are able to take care of emergencies even in your absence.
Supplement Your Income
If you’re like many young people, you probably struggle to afford common expenses. Your income may not be high enough to cover all financial needs as they arise.
Getting life insurance cover is one way to build your financial foundation. This is because some policies are designed to help supplement your income. For example, they may act as security when borrowing money from a bank to start or expand your business.
How to Purchase Life Insurance Early?
If you’ve decided to buy a life insurance policy as a young person, below are a few useful tips to get you started:
Decide How Much Money You Want to Spend on Life Insurance
The idea here is to set a budget that you are sure to stick to without straining your other financial aspects. What’s more, you want to ensure that you can pay your premiums consistently. This reduces the chances of the provider denying cover when the insured risk occurs.
Explore the Viability of the Other Available Life Insurance Options
For example, if your employer offers insurance cover as part of employees’ benefits, try to find out whether the assured amount is sufficient depending on your probable risks. Can the amount help your dependents continue leading comfortable lives in the event of your passing away? If not, getting additional coverage of your own is critical.
Ask Your Insurance Provider to Help You Pick an Appropriate Policy
Most reputable companies will be happy to guide you based on your specific needs and offer a plan that works for you. Some will even create a custom plan that suits you and your loved ones.
Explore Thoroughly Each Term and Condition for Your Preferred Life Insurance Policy
This is key in ensuring that you can abide by the set rules and remain eligible for coverage should the insured risk occur. If needed, we recommend having a law practitioner or your insurance provider walk you through the sections you don’t understand. Clarity is key in any contract including life insurance.
It’s never too early to take out life insurance. Having a family or people who depend on you makes it even more critical to get coverage. So, what’s stopping you from buying life insurance? Let us know in the comments below and we’ll be happy to point you in the right direction.