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Now Might Be a Good Time to Purchase Life Insurance. Here’s Why

Life insurance is a grudge purchase and most people wait until later in life or until it becomes necessary before taking out a policy. For example, when they have dependents or they take out a mortgage that requires them to have life insurance.

What they don’t realize is that buying life insurance sooner rather than later has greater benefits. So why is right now a good time to buy life insurance?

The Cost

Insurance companies use a variety of different factors to calculate premiums or the rate that you will pay for life insurance. Chief among these is age and health. The older you are, the more you are going to pay for life insurance.

An average male in his 30’s pays around $214 for a $250,000 life insurance policy per annum whereas 40 year olds pay more than double – on average $486.

Health

Ageing increases the risk of developing health conditions which can make it difficult to take out a life insurance policy. Chronic or serious health conditions could result in paying more or even being excluded from being approved for a policy.

A health condition that puts your life at risk means that it is unlikely that any insurance company will grant a policy. It is therefore best to purchase life insurance while young and healthy.

Dependents

A dependent relies on the income of a bread-winner. If the bread-winner passes away, they are left with no means of supporting themselves. It is a good idea to take out life insurance as part of planning a wedding or family planning.

The life insurance payout ensures the financial security of dependents after an income earner has passed on.

Debt

Unsecured debt becomes payable upon passing. This is any debt that does not have collateral such as credit cards, retail or store credit, personal loans, etc. Car finance and home loans generally repossess a vehicle or property in order to recover the outstanding amount on the loan.

Life insurance ensures that unsecured debt is paid upon passing and that beneficiaries of the estate do not become burdened with debt that was accumulated by
someone else.

Value

One of the reasons why many people delay purchasing life insurance is because they cannot see the value that a policy will have for them personally. After all, the payout is for those that are left behind after passing. Whole life insurance does however provide value and can be cashed out if equity has been accumulated.

This equity or cash value of the policy can be used as a down-payment on a house or to fund retirement. Using the equity does not mean that the life insurance disappears – only that the payout will be reduced by the amount that is withdrawn before death. Life insurance can therefore be an investment just like a retirement fund.

The cash value is also tax deferred which means that no tax is payable on the value until it is withdrawn from the policy.

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