This question was posed to me recently, “What is the biggest mistake when it comes to Life Insurance?” After much consideration and being well aware there are numerous mistakes made concerning life insurance, the biggest mistake I find is the timing of the purchase.
I consistently see families who are trying to purchase life insurance at a fairly late stage in the cycle of life. Many of these families have multiple children from infants to teenagers that triggered the desire to seek out coverage. Some have had a spouse with a recent health scare that has focused their attention more acutely on income replacement. Others have had a friend or relative pass away without life insurance and witnessed first-hand the financial hardships that followed.
Other problems with waiting too long aside from the obvious early demise are higher costs, possibly not qualifying for coverage, or not being able to afford the coverage you need. As humans most of us tend to be short sighted and live in the now (rightfully so in most cases). However, finding out you have developed cancer from blood work when applying for life insurance to support your family in the event of your passing is a huge problem that can be avoided or limited with a little forethought.
So when is the right time to buy life insurance?
The age will vary from person to person, but the answer is as early as possible. When you begin to live life on your own and are no longer a burden to your parents, the first thing you should do is run out and apply for life insurance. Why? Because you need life insurance in place for upcoming life changes and to avoid becoming a burden to your parents again should you leave any have financial obligations when you die. If you become an expecting parent before moving out of your parent’s house the need for life insurance may come sooner.
I am not suggesting at age 24 every person should run out and buy a million dollars in life insurance coverage. However, I am suggesting that at 23 or 24 years old a person is on the precipice of life changing events that could and should be covered in case they pass away. Marriage, children, mortgages, business ventures, medical bills, and possibly student loans may need to be paid or supported with life insurance. At the young age of 24 an individual could get a 30 year term life insurance policy with a $100,000 death benefit for a little more than their monthly Netflix subscription. There may be need for additional insurance as life events occur, but an early policy would create an economical foundation of coverage that could be supplemented with other policies when needed.
Many people I speak with have the intent to get life insurance or understand the need, but something prevents the purchase. Premiums aren’t affordable, don’t have the time to apply, I am going to quit smoking first so my rate will be lower are just some of the excuses I hear. Unfortunately these excuses often lead to friends and family trying to raise money on social media for the spouse and children who are left behind when tragedy strikes.
So avoid the biggest mistake people make when it comes to life insurance and go online and get a life insurance quote. We will all need it one day and ultimately you are buying it for your loved ones, not yourself.