Q: I am 21-years-old, studying full-time, working part-time, and I would like to know when is the “right” time to get life insurance and if I really need life insurance this young. I work in the banking services industry and I hear a lot of my customers discussing their insurance details with me and how I should get life insurance. But to be honest, I have no clue if I should get it all and if so, when should I purchase it?
A: The main reason for buying life insurance is to protect those who are financially dependent on you in the event you pass away. If you are 21 years old and have no dependents life insurance would not be a necessity. Having said that, there are many advantages to taking life insurance at a young age. You guarantee your insurability because life insurance rates are based on your age, gender, and health. So by taking a plan now, you can lock in at a lower premium rate for life. Here are some other reasons you may want to buy a term life insurance policy:
You have debt with a co-signer
If your parents signed off on your student loans, they’re responsible for paying off your debt if you die. That could be a huge burden for a mourning family. If you have a life insurance policy and you pass away, your family can use the policy to pay off your debt.
You’re buying a home
Let’s say you buy a place with your partner. Now imagine one of you suddenly wasn’t there to help pay the mortgage. Buying a term life insurance policy with enough coverage to pay off the house could help your partner stay in the home.
You make a lot less (or a lot more) than your partner
Is there a big disparity in income between you and your partner? If so, then insuring the difference in income means that if the higher income person dies, the lower earning person can maintain their standard of living while they rebuild their lives.
And finally, buying life insurance requires that you take a medical exam to determine your premiums and level of coverage. You’ll want to lock in a standard rate now in case illness is in your future: If you have a term insurance policy, there are no further medical requirements for the duration of the term. So it might be a good idea to apply now to take advantage of your good health—and better rates.
Lorne Marr, is the founder of LSM Insurance, an independent Canadian Life Insurance Brokerage company in Markham, Ont.
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