Investing in life insurance is certainly one of the smartest and most rewarding investments you can make in a lifetime.
And what’s even smarter, is if you do it while you’re still young and healthy.
Why?
Well, the answer is pretty simple.
If you are still a young and healthy person, your premium will be much lower than when you get older or sick or both.
The younger – the better
Namely, insurance companies base their business policy on the simple fact that the chance of you dying is much lower while you are young than when you are old.
By contracting a life insurance policy at a younger age, you will save thousands of dollars as the premium is then much lower, while with age it grows proportionally, which means the more years of life – the more expensive the insurance premium.
According to Policygenius, if you decide to take out a life insurance policy in your 20s or 30s, with some insurance companies and depending on the type of life insurance, you will pay only $1 a day to pay a six-figure amount in the event of death!
For example, a healthy male in his mid-thirties can buy a million-dollar life insurance policy for approximately $50 a month for 20 years life term.
The same person will, if he waits until the mid-forties, pay a monthly premium of more than $ 110 a month.
Although there are gender differences, the savings are more than obvious for both women and men.
Thus, by contracting life insurance at a younger age, a woman will save more than $10,000, and a younger man just over $4,000 more than his gender counterpart.
Of course, when purchasing life insurance, it is important to take into account the expiration of the policy, so contracting at an earlier stage of life means the policy will expire sooner.
A smart move would be to contract a policy for 30 years at 35 years of age.
This means the policy will expire with your retirement at age 65 when your by then financially dependent members have already become independent and there is no need to pay a large sum of insurance.
“I don’t feel like I need it”
However, for younger individuals, who are not yet financially self-sufficient and are actually just at the beginning of the path to building financial stability, contracting a life insurance policy may seem like an unnecessary expense at an inopportune moment.
This is why it is important to determine the amount of policy you need to benefit your beneficiaries.
The first step is to determine the sum of your debts, and by debt we mean all the financial obligations you might have, starting with various loans, mortgages, card debts, but also costs that you expect to burden you during the term of the insurance policy.
The amount of the policy you are purchasing should be enough to replace your income and provide you with uninterrupted expenses for daily needs for a certain number of years.
The last step is to deduct (from your income) the number of your debts and other expenses including unexpected ones, such as accidental death.