Unlike medical insurance, life insurance is not something you will claim on—however, that doesn’t mean you should underestimate the importance of having an appropriate level of cover in place to protect the needs of your loved ones.
Nevertheless, most people procrastinate on buying life insurance until a life event prompts them to think about it. And why not? Technically, a single, young person with no dependents or debt may not need life insurance, compared to someone with dependents (a spouse, children, elderly parents) and debt such as a mortgage or car loan.
To put this into context, having a life insurance policy in place is effectively a responsibility. If you have kids and don’t have life insurance, you may be putting your entire family at risk. And even if you don’t have kids right now, as long as you plan to have a family at some point, there are serious benefits to buying insurance early on in your life.
Why buy early?
1.It’s straightforward when you’re healthy.
While many of us may remain perfectly healthy for a long time, if anything unforeseen happens to your health, your application for life insurance may be subject to premium loadings—or even be declined. That’s why you should buy life insurance as early as possible, while you’re in the prime of health.
2. It’s cheaper.
Most life insurance policy premiums are fixed at the time of purchase, so if you buy when you’re younger and healthier, your premiums remain lower throughout the lifetime of the policy.
3. Protect your young family.
Should something unforeseen happen to you at a young age, you want the assurance that your family can meet their fundamental needs and preserve their lifestyle—especially if you’re raising young children, while supporting your parents and being the primary breadwinner. Furthermore, if you own a home or a business, or have personal liabilities, someone else will become responsible for those liabilities. Typically, this is your spouse, your parents, or your siblings.
The amount of life insurance that you need will depend on several factors—including your age, your dependants, your debt levels, and your living expenses. While a detailed analysis that takes into account these variables can help to determine your optimum level of life insurance cover, the actual amount will also depend on how much you can afford.
Insurance can seem complicated and overwhelming at first, but this is where a financial adviser comes in. He/She is responsible for ensuring that you are neither under- or over-insured, based on your current life situation and any life changes you could experience in the future. Most importantly, don’t be afraid to ask questions (even the ones you think sound silly!) so that you’ll always have a clear understanding of what you’re getting from your life insurance policy.
After all, you’re just looking out for the people who matter the most to you—your family.
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