Like most people in their 20s, I am at an interesting point in my life when it comes to life insurance. I can get a policy now for the lowest price ever again, yet I don’t feel compelled to get it yet. Here is the logic behind why I probably should get life insurance, and when it is best to sign up.
What is Life Insurance?
Life insurance works just like car insurance, health insurance, or home owner’s insurance. Each of those types of insurance cover a loss. Life insurance covers a loss of life.
Life insurance is designed to pay a beneficiary if you die. The beneficiary can do anything they want with the money. Most commonly, it is used to cover funeral expenses and replace income for a certain period of time.
When is Life Insurance Important?
I don’t have a wife or kids. If I die, no one will be left without money to eat and pay the mortgage. If you are a parent or the sole income earner of a household, life insurance can be very important.
We don’t like to think about the morbid, but we can die. Sadly, people die before their time every day. We all hope it doesn’t happen to use, but we should be prepared and protect our families and loved ones in case of a worst case scenario.
What If I Don’t Have a Family?
If you don’t have a family, life insurance doesn’t seem like a big deal. Who does the money go to? Who needs it? Is it worth the expense?
I personally have life insurance through my job. I took the 5x annual pay option and designated my little sister as my beneficiary. I don’t plan on anything happening to me, but if it does, her medical school education is covered.
Recently I have looked to going further by purchasing my own policy. In my situation, if I leave my job the insurance policy is gone. If I choose to become self-employed, get fired, move, or find a new job, my work policy is gone in less than a month.
If you own your own policy independent of your employer, it goes with you no matter what as long as you continue to make your payments. The most important part: the cheapest you can ever get life insurance is right now!
Life insurance premiums go up with age and risk. As you get older, you are more likely to die, so you have to pay more per $1,000 of coverage. If you have any medical issues or participate in high risk activities, your premiums go up even more. But if you lock them in right now, they are locked in for life.
Where to Look for Insurance?
If you are ready to get insurance, you can work with any major insurer to find a policy. Shop around, because rates and benefits differ at each company. And in case I didn’t convince you that life insurance is cool, check out the Life Insurance Movement by my friend Jeff Rose.
Image by ell brown / flickr