Life insurance policy is something that is incredibly vital for every human being existing – be it at birth or when they are well into their life. There are several sources where people still question the need for an insurance policy but do not follow the herd blindly; you should by all means talk to a financial planner or invest some time in financial planning for yourself and your family.
But to understand when to buy life insurance policy, it is imperative to understand why you need to buy a life insurance policy.
Why a Life Insurance Policy
Life Insurance policy is needed so that in case of premature death due to any reason, be it illness or an accident, the policy-holder’s family is secured and get some financial support.
There are two types of policies currently, in today’s market –
- One is term insurance which is an insurance policy in the purest form possible since it does what it’s supposed to do, which is benefit you if something happens. This is the actual purpose of the insurance policy. It functions as a tool and not as an investment tool.
- Now the market is flooded with a second type of insurance policy which offers investment as a part-and-parcel of the deal. These policies, also called endowment policies, often lure customers on the basis of a few benefits such as tax benefits, etc.
When to Buy a Life Insurance Policy
1) At Birth – An insurance policy should ideally be purchased for someone when they are born – a life insurance keeping the life-span in mind should be purchased as soon as possible as the policy will end up becoming more and more expenses as the years pass on by.
However, this topic of parents buying a life insurance policy is a debated upon topic. But on the whole, most sources seem to incur that a policy can be bought when the person insured is a minor and the policy can be shifted to the person when they reach the legal age, that is 18 years of age.
2) Early Youth (early twenties) – In the ideal world, most people would also consider purchasing a life insurance policy as among the many benefits, it also acts as debt coverage in some cases. However, since most youngsters are busy trying to start earning and pay for their expenses (however minimum), they usually forgo the idea of buying a life insurance policy at this ideal age.
3) 35 and Under – The optimal age to buy a life insurance policy has been reported to be for anyone at the age of 35 or under. The younger the policyholder, the better of course as the most companies prefer to give insurance to someone who is in the peak of their health. The older the person, the more chances of them facing some lifestyle disease or illness or even some critical illness and the less chances of a company insuring them.
4) Whenever A Person Starts Earning – Age is of course a critical factor in the issuing of a life insurance policy due to the company wanting to issue a policy to someone who can stand the policy and benefit from it. But in situational terms, a person should apply for a life insurance policy as soon as they start earning, especially if they contribute to their family household finances. If they have dependents on them, such as supporting their aged parents or being the sole breadwinner of their family, then it is vital that they get their life insurance policy to protect their family’s future from unforeseen circumstances and tragedies.
5) Before Age Limit – Most, if not all, companies have an age limit within them for issuing life insurance policies to people. This can vary but usually companies cap their age limit at either 65 to 70 years. Since most people tend to put off buying a life insurance policy in the beginning of their lifetime, another way to ensure that you have some coverage for yourself and your family is to simply secure a policy before you hit the age limit.
6) During A Business Start-Up – Yes, you read that right. You can look into various different types of companies offering a life insurance policy since some of them offer certain benefits. One of these benefits can be regarding your business. The policy can offer your business partner the option to purchase your share of the business without any hassle and the subsequent payment from the deal will then go to the deceased’s nominees. They will however, not be given a stake in the business.
There are different types of life insurance policies and various situations and reasons why one should invest in one – and the points stated above are just some of the many situations. It is best to secure your family’s future by doing your financial planning in time and investing in a life insurance policy today – not just for your benefit, but your loved one’s as well.