Why Waiting to Get Life Insurance Could Cost More Than You Think
When you're in your 20s or 30s, you may not be thinking about life insurance. You're young, healthy, and maybe you don't have children or dependents yet, so why worry about life insurance?
Getting a life insurance policy now may be a wise and cost-effective decision. Generally, the earlier you purchase a policy, the easier and more affordable it tends to be. It's all about planning ahead to protect your future and your loved ones, even if it feels a bit premature right now.
The financial risk of putting off life insurance
A lot of people put off buying life insurance until they have children or they're more financially established. However, a delay in purchasing a policy can be a mistake. There are three key reasons why:
1. Policies get more expensive with age
Regardless of what type of life insurance you choose – term or whole life – premiums increase with age.
For example, say you're in good health and want to buy a 20-year, $500,000 term life policy. If you're 25 and male, the policy could cost just $25 per month for the length of the policy. Wait until you're 35, and the premiums may rise to $28 per month. If you purchase a policy at 45, the premiums jump to $56, which is more than double the cost of a policy for a younger applicant.
| Age at Enrollment | Male | Female |
| 25 | $25 | $20 |
| 35 | $28 | $23 |
| 45 | $56 | $44 |
| 55 | $137 | $99 |
| 65 | $450 | $316 |
| *Quotes assume a 20-year term and $500,000 death benefit | ||
2. Health issues are more likely to hamper getting coverage
When you purchase a life insurance policy, the insurer will review your medical history, and it may require a medical exam. If you have existing health issues, such as a heart condition or high blood pressure, the insurer may charge higher premiums.
In general, younger adults are healthier than older people, and are less likely to have health issues or pre-existing conditions, so coverage is generally less expensive.
As you age, your risk of developing health issues rises. If you develop any such conditions before purchasing coverage, your policy will likely be much more expensive. For example, below are the sample rates for an adult in good health compared with one whose health is poor:
| Age at Enrollment | Good Health | Poor Health |
| 25 | $25 | $36 |
| 35 | $28 | $41 |
| 45 | $56 | $89 |
| 55 | $137 | $220 |
| 65 | $450 | $700 |
| *Quotes are based on an adult male. | ||
3. Getting a policy can be a faster, easier process
Because younger adults tend to be healthier, with fewer pre-existing health issues, it's often easier to purchase coverage in your 20s or 30s. Many insurers offer accelerated or simplified underwriting for young, healthy adults, so you can purchase coverage without a medical exam. With some insurers, you can complete your application and receive approval within minutes.
As you get older or develop health conditions, you can usually still qualify for life insurance. However, the process can be more intensive and time-consuming. You may have to undergo a medical exam, complete with bloodwork, and the underwriting process can take days or even weeks.
Benefits to purchasing life insurance while you're young
As a young adult, just starting out in your career, you may be on a tight budget. The idea of taking on premiums for life insurance may seem impossible, but it can be a worthwhile investment for the following reasons:
1. It's less expensive than you might think
Life insurance can be surprisingly inexpensive. Life Happens, a nonprofit professional association for the life insurance industry, reported that healthy adults under the age of 30 pay less than $200 per year for $250,000 of term life coverage. When you buy life insurance, you can secure a low rate for the duration of the policy.
2. You can lock in a policy
Purchasing life insurance gets more difficult as you age or develop any health issues. But, if you purchase life insurance when you're young and healthy, you can lock in a policy. Depending on the type of coverage you choose, you might have coverage for 20 years or more, without worrying about rising premiums.
3. It provides peace of mind
With life insurance in place, you’ll benefit from a certain reassurance about the future. No matter what life throws your way, whether it's having kids or taking care of your parents, having a life insurance policy ensures your loved ones are cared for financially if you're no longer around.
This story was created in partnership with Money.com.
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