WEDNESDAY, MAY 5, 2021
Many people don’t consider life insurance until they’re older and have already accrued a lot of debt or wealth. However, there are benefits to purchasing life insurance early, especially if you are under the age of 35.
Insurers base premiums (the amount you will pay for your policy) on the risk they have of paying a claim. To calculate premiums, life insurers will look at your risk of death, as death will likely trigger a payout. The less likely you are to die, the lower your rates might be.
Given that younger people are typically healthier (i.e. less likely to die) than older people, their insurability often is better. Therefore, if you enroll in your policy while young, you will likely be pay a lower premium. You’ll also often be able to keep any premium increases stable over the life of the policy. You might even be able to lock in that rate for the entire policy term.
If your insurability decreases as you age, you might eventually become ineligible for certain policies. First, as your average rates increase, you might not be able to afford certain policy options. In other cases, insurers might begin to deny your policy applications because they see too many risk factors related to your health or overall factors. Those who are young usually have the greatest choices and flexibility to adapt their policies.
3. Greater Savings & Earnings Potential
Some life insurance, notably whole-life coverage, offers cash-value accumulation options.
Policies vary, but in a simple whole-life scenario, you will pay your premium. The insurer will then invest a portion of that premium, which will go into an account that accumulates cash value. You then usually have the option to borrow from or even re-invest those savings. Certain policies will pay this cash value in addition to the death benefit to your beneficiary.
Since cash value increases over time, the longer you have your policy, the more money it can accumulate in cash value. The more time you have to let the value mature, the more money you might be able to get both while you are still alive or for your beneficiaries after your death.
Ask an insurance agent about the best life insurance policy for you and your family as well as ways you can save money on this protection.
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