When are the Best (and Worst) Times to get Life Insurance?

We’re officially one month into a new year (and new decade) and many of us (myself included) are thinking about getting our finances in order and planning for the future. 

You have debts to pay off, goals to save up for, retirement accounts to plan for, but what about life insurance … have you been thinking about that?

If you are a young, healthy person, you might not think you need to worry about life insurance just yet. You don’t want the extra expense, and you of course, don’t plan on dying any time soon, so is it necessary?

The truth is, now is the time you really should start thinking about life insurance because it is a pivotal part of future financial planning.

Even though it may not seem urgent, not everyone can qualify for life insurance, and there are many factors determining if you are eligible. The last thing you want is to wait until it is too late and be unable to acquire life insurance.

We know life insurance is confusing and may feel like a large commitment. At Berry Insurance, we spend time each day helping our clients navigate the process of acquiring life insurance, by answering all their questions, including, “Do I need life insurance? Which type do I need? How much should I get? When should I get it?” That’s what we are going to do for you in this article as well.

So let’s start with the basics:

What is life insurance?

Life insurance provides financial security to the family of the policyholder if he or she passes away. 

Life insurance funding paid out to the beneficiary of a policyholder may be used for funeral costs, debt payments, continuation of the policyholder’s income, college savings for children, and other final expenses.

There are two main types of life insurance: term and permanent. 

Term insurance provides coverage for a certain time period, often 10 to 30 years. If the insured passes away during the term, their beneficiaries receive a death benefit payment, but the policy loses all value once the term ends. 

Permanent insurance offers lifetime coverage including both a death benefit, which is the compensation paid to the beneficiary once the insured passes away, and a cash benefit, which is a savings account available to the insured while he or she is still alive.

In this article, we will be mostly referring to term insurance, as it is the simplest, most affordable, and most commonly used option. 

To obtain life insurance, you first need to qualify for it. 

So when is the best time to apply for life insurance to qualify for it and get the lowest rates?

When are the best times to buy life insurance?

When you’re younger:

Life insurance is going to be cheaper the younger and more healthy you are — simple as that.

In the eyes of life insurance carriers, life expectancy is a measurement of risk. The better your life expectancy is, the less of a risk you are to the insurance company. 

Insurance companies don’t want to have to pay out life insurance, so they charge more (or deny coverage) to older, less healthy individuals who they see are more likely to cost them money.  

If you’re young and in exceptional health, not only will you qualify for life insurance, but you may qualify for even lower preferred premium rates. 

So if life insurance cost increases with age, and you are the youngest you will ever be right now, why wait?

Many people put off purchasing life insurance because they don’t want to pay for another service, especially one they don’t anticipate needing to use. 

While we’re all hoping to live long, healthy lives, the truth is we don’t know what each day will bring, and it is wise to be covered in case of an emergency.

We realize that often, people who are younger are trying to get their finances together — you may not be where you want to be in your career yet, you may be trying to pay down student loans and other debts, or saving up for a house or college funds for your current or future children. 

The idea of taking on another monthly expense might seem daunting, but if your family is struggling financially, then you especially need life insurance, because your death will further negatively impact your family’s finances.

If a large life insurance policy just isn’t in the budget, you can always start with a shorter term or smaller amount on your life insurance policy and increase later. Of course, you’ll risk having a health change during that time causing an increase in premiums, but it’s better to at least have some coverage than wait until it’s too late. 

Once you have dependents:

So we know younger is better. Doesn’t that mean we should have all got health insurance when we were children? Not exactly. 

When you consider the purpose of health insurance: to provide a financial safety net to your family if you were to die, you can see that life insurance is only necessary if you have people who are depending on you financially. 

For example, if a 25-year-old single man is living alone, he might not need life insurance because if he were to die, nobody would suffer financially. 

However, if another 25-year-old is newly married and starting a family, it would be wise for him to purchase life insurance, because if he were to die, his wife and kids could struggle to pay for expenses without his income to support them. 

Many people assume that a spouse or parent who doesn’t work doesn’t need life insurance because if they were to pass away, there would be no income lost.

While this may be true, there are other considerations to make. 

For example, if a stay-at-home mom were to pass away, while there would be no income lost, her husband might need some time off from work to grieve. If the mother cared for the children while her husband was working, he might need some extra money to start paying for childcare.

In this case, the wife might not need as much life insurance coverage as her husband, but it is still a good idea to hold a policy to ensure her husband and kids would be secure after her death. 

Before you come down with a health issue:

Even if you do not yet have dependents, if your plan is to eventually have a family and you have a strong family history of medical problems, you may want to get life insurance.

For example, if you have a strong family history of cancer and realize you have genetic risk factors, you may want to apply early to avoid becoming sick and being denied insurance when you actually do need it.

If significant enough, family history could increase premiums, but it is better to apply early and pay a slightly higher premium than trying to apply after being diagnosed with an illness and getting denied. 

What are the worst times to buy life insurance?

Late in pregnancy:

You know you’re definitely going to want life insurance once you have kids, so it’s probably a good idea to apply for life insurance when you’re pregnant, right? 

Maybe not. 

While it is wise to have life insurance before your children are born, due to the health implications of pregnancy, expecting mothers may need to do a little more planning. If a woman is in the first two trimesters of pregnancy and hasn’t had any complications, she should have no problem obtaining life insurance. 

However, if she waits until the last three months of the pregnancy, she may run into trouble. Since lab work tends to change in the last trimester, an insurance company may deny an expecting mother or raise her premiums. So if you’re pregnant, apply early, otherwise you may have to wait until after you give birth and your health is back to normal. 

If you have health conditions:

You’d be surprised how many people come down with a health condition, decide they need life insurance, then try to apply. Unfortunately, if you have a health condition, insurance carriers are likely to either deny coverage, or provide it at a higher premium.

Of course, you can’t predict when you are going to experience a health issue. If you have no other choice, you can still apply — you may be approved at a higher premium. It’s better to obtain coverage at a higher premium then to put it off until the condition worsens and you are not eligible for any coverage.

When you may want to consider re-applying:

If you’ve improved your health conditions, you may be eligible for lower rates. For example, if you applied for life insurance when you were overweight, had high cholesterol, or high blood pressure and lost weight or improved cholesterol or blood pressure, reapplying for life insurance could reduce your premium.

The same idea applies to denials. If you received a denial for a pre-existing condition, you may be able to re-apply after being free of the condition for a certain number of years.

It doesn’t hurt to apply:

If you are older and not in ideal health, it doesn’t mean you are out of luck qualifying for life insurance. While the coverage may be more expensive, there are plenty of options for those not applying within the ideal age range and health status. 

No matter what stage of life you’re in, it doesn’t hurt to apply for life insurance. Submitting an application will get the ball rolling and help you get an idea of what your policy will look like. 

Our Berry agents have helped hundreds of people gain the life insurance best for them, and we can also work with you to help you get the amount of life insurance you need within your budget.