Life Insurance Tips: Age/Debt vs. Assets

When Should You Start Looking for Life Insurance?

If you talk to a younger adult, you would probably expect to hear answers like, “when I get married, when I have a child, or when my income is higher”.

What would you expect most middle-aged adults to say?  More often than not, they would probably tell people younger than them, that they should start earlier to save money and lock in their insurability.

How about elderly adults?  For the majority of the ones I have spoken to, they have said that they see the value of having a policy even if they don’t have a desperate financial need.  New motivations arise, such as funding their grandchildren’s education or leaving a family legacy, but most tell me they would buy a policy if they could afford it.  Luckily many elderly, retired adults do not “need” coverage (other than for estate planning, etc.), as much as they may “want” it.

Cost and age are definitely factors which can lead someone to start looking for life insurance coverage.  Another factor, unique to each individual/family scenario are their financial obligations.  If you passed away today, would you leave more bills or assets behind?  For the majority of families who have mortgages, auto loans, school loans, or other financial debt, the answer is clear – we wouldn’t have taken out any of those loans if we had the resources to pay them off in cash.

When you realize that you owe more than you’re worth, you either work harder, or work smarter to pay those debts off.  But what if something were to happen to you which would put a halt on your debt paying ability?  Would your significant other be able to earn the difference through their next pay raise?  If your child was to help out with repaying the obligations, would the family then be able to afford the monthly bills?  Because the majority of Americans do carry at least some form of debt, “purpose” is a big driving factor in leading someone to purchase life insurance.  The moment they realize the risk, is usually when they seek out the coverage.

In summary, when it comes to cost, anyone in the market to purchase life insurance is going to wish that they had signed up earlier.  The younger and healthier you are the cheaper it is.  Also, when it comes to motivating factors of when you “need” the coverage, the answer should be: whenever your debt outweighs your assets.

In Part 2, I will be covering when to buy Life Insurance based on the type of policy you are looking to purchase.
Bryan