When should I get life insurance?

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Topic Author
rylemdr
Posts: 352
Joined: Wed Jun 15, 2011 6:10 am

When should I get life insurance?

Post by rylemdr »

I am 21 years old and I have no dependents. When should I get life insurance so I can ensure a low premium when I do have dependents?

My thinking is that if I get life insurance now for 30 years, by the time it ends I would be 51.

I plan on having kids before I'm 30 years old, so by the time my insurance expires, my child would be at least 20 years old.

The savings must be enough to beat investing the money instead of paying it out early.

Any sites or calculators would be very helpful. Thank you.
yahtzeefish
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Post by yahtzeefish »

well it sounds like you want term, but term isn't an investment unlike permanent insurance. If you want to do a 20 year custom whole life that would require you to pay for 20 years and then the policy would continue to grow and you could pull out money from it as you wish.

I don't quite understand what you mean by "The savings must be enough to beat investing the money instead of paying it out early."
Tabl83
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Joined: Mon Aug 15, 2011 1:45 am

Post by Tabl83 »

Personally I would say that you should forego insurance until you have dependents. I waited until my wife and I were trying to conceive to get it.

If you do this you are doing something called retaining the risk. My argument is that if you die today that what do you care if you have life insurance. You are dead, and no one is going to be relying on your income.

This is not the right choice for everyone because of the simple fact that some people will lose their insurability with age due to illness, as well as higher premiums that you pay (as you already noted).

But if you run some quotes on websites I don't think that higher premiums are really a large factor. I just ran a quote for a healthy 40 year old man. non smoker for $500,000 20 year policy that was about $400 a year. Cheap in my mind.

Invest until you have dependents!
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Frugal Al
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Post by Frugal Al »

yahtzeefish wrote:well it sounds like you want term, but term isn't an investment unlike permanent insurance.
Permanent insurance isn't an investment either.

Rylemdr, unless you have some genetic predisposition that might affect your future health and insurability, it generally makes little sense to buy early.
Sulvar
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Post by Sulvar »

I don't think you should buy insurance unless you need it, and right now you don't need it. Who knows what your future holds.
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dandan14
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Post by dandan14 »

If you are in good health, you'll be fine either way.
Take a look at term4sale.com and price some scenarios.

At age 33, I bought a 25 year term of 1M coverage. That will take me to age 58 (hopefully when all of our current and future kids are out of the house). My cost for that is about $570/yr.
Topic Author
rylemdr
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Joined: Wed Jun 15, 2011 6:10 am

Post by rylemdr »

Thank you all for the replies.

I was just thinking that if I get life insurance early, I could get a lower premium than if I would get it years later.

I guess getting life insurance at 28 when I have some kids would not cost much more than when I am 21. In fact, the more I think about it, getting it at 28 years old would probably be even cheaper because a 21 year old would much more likely get into a car accident in an actuarial statistical point of view(just my opinion).
Tom_T
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Post by Tom_T »

rylemdr wrote:Thank you all for the replies.

I was just thinking that if I get life insurance early, I could get a lower premium than if I would get it years later.
That's true -- but the policy could run out while you still need insurance. Using your example, if you get a 30-year policy at age 21, and then you have a kid at age 30, your policy will expire when he/she is 21 and you are 51. That is not necessarily the end of your insurance needs, though. What about your wife? Your house? Will you still have a mortgage to pay?

I would wait until you get married. If it's by age 30 or so, rates will still be attractive.
delirium330
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Post by delirium330 »

I'm 29 now, bought 25 year term 3 years ago, and we're having our first kids next year. I decided to get it a few years in advance to hedge against health risk. Many would say that's probably foolish because the change in rates with 3-4 years of age aren't really going to change dramatically if your health condition remains relatively constant. I actually had some concerns related to some specific health issues at the time that wouln't yet classify as pre-existing conditions so I bought it early.

I'd recommend waiting to buy unless you're in a unique situation. Apart from that I HIGHLY suggest getting yearly blood tests and a preventative care checkup with your doctor. Your rate category will be based primarily from your blood test results that the insurance company will take, get them checked out now and then determine which areas you need to improve prior to getting insurance, i.e. give yourself a year or two to improve values if needed like LDL and HDL cholesterol levels, fasting glucose, blood pressure, etc. Aside from insurance, this is the easiest thing ANYONE can do yearly to keep tabs on their general health and is INVALUABLE long term when we're talking about medical cost savings. It's free with most health plans and takes 30 minutes.

Also, you're talking about thousands of dollars in premiums, so read up on what to do before you get tested by the insurance company. Things like not drinking alchohol 2-3 days before the test, learning relaxation techniques to control blood pressure (the nurse taking your BP isn't going to care if you just got done being stressed out working on something).
Don Robins
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Post by Don Robins »

If you are employed full time, I would suggest you focus on buying disability insuranace at this time. Buy the life insurance if and when you need it.
Last edited by Don Robins on Thu Aug 25, 2011 12:39 am, edited 1 time in total.
BruDude
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Post by BruDude »

Don Robins wrote:If you are employed full time, I would suggest you focus on buying disability inaursnace at this time. Buy the life insurance if and when you need it.
x2
Topic Author
rylemdr
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Joined: Wed Jun 15, 2011 6:10 am

Post by rylemdr »

delirium330 wrote:I'm 29 now, bought 25 year term 3 years ago, and we're having our first kids next year. I decided to get it a few years in advance to hedge against health risk. Many would say that's probably foolish because the change in rates with 3-4 years of age aren't really going to change dramatically if your health condition remains relatively constant. I actually had some concerns related to some specific health issues at the time that wouln't yet classify as pre-existing conditions so I bought it early.

I'd recommend waiting to buy unless you're in a unique situation. Apart from that I HIGHLY suggest getting yearly blood tests and a preventative care checkup with your doctor. Your rate category will be based primarily from your blood test results that the insurance company will take, get them checked out now and then determine which areas you need to improve prior to getting insurance, i.e. give yourself a year or two to improve values if needed like LDL and HDL cholesterol levels, fasting glucose, blood pressure, etc. Aside from insurance, this is the easiest thing ANYONE can do yearly to keep tabs on their general health and is INVALUABLE long term when we're talking about medical cost savings. It's free with most health plans and takes 30 minutes.

Also, you're talking about thousands of dollars in premiums, so read up on what to do before you get tested by the insurance company. Things like not drinking alchohol 2-3 days before the test, learning relaxation techniques to control blood pressure (the nurse taking your BP isn't going to care if you just got done being stressed out working on something).
Very good idea. I will do this.
Don Robins wrote:If you are employed full time, I would suggest you focus on buying disability inaursnace at this time. Buy the life insurance if and when you need it.
I am employed part time as of now, and I make just a few notches above minimum wage. Good idea all the same. I will get disability insurance when it will apply to me.
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