Is it ever too soon or too late to buy life insurance?

Recession, stock market ups and downs, a global pandemic — it feels like we’ve lived through it all recently.

Although every crisis passes, there are some things that don’t change:

• you can never predict the future and
• there’s always a need to protect the people you care about after you’re gone.

And the sooner you make plans to protect them, the better. Here’s why.

Imagine a couple with three children and each parent earning $85,000 per year. Then disaster strikes: one parent dies.

The drop in income is drastic. But life goes on, and so do electricity bills, school expenses, clothes shopping, groceries, etc. Living expenses don’t drop by half when a parent dies.

That’s where having good life insurance coverage offers a helping hand. Insurance provides financial security to those you’ve left behind who’ve depended on you — your spouse, your children, and/or partners.

How does insurance help the people closest to you? 

The tax-free proceeds your beneficiaries receive from your life insurance help:

• make up for the loss of income and 
• pay off any outstanding debts after you die.

What happens if you buy life insurance at a young age?

Do you want the peace of mind that comes with having life insurance? You first need to prove to the insurance company that you’re “insurable.” That means you need to answer the insurance company’s questions about your health. That way, it can properly assess your insurance application through a process called underwriting. Otherwise, you run the risk of your application being declined or of paying a higher premium.*

(*Premiums are the monthly or annual fees you pay to have insurance.)

By taking out life insurance when you’re young, you have a better chance of qualifying for guaranteed insurability.

Your life insurance premium often depends on your age, lifestyle habits, medical history and current state of health. If you’re a healthy person in your 20s, you’re more likely to fall under a low health-risk category. This means you’re more likely to get a lower premium.

It’s never too soon to buy insurance. You’ll be more likely to pay a standard premium when you’re still young and healthy.

Parents can even take out life insurance on their newborn. This type of temporary life insurance — like other term life insurance  — can be converted to  permanent insurance  when the child reaches adulthood. At that point, there’s usually no requirement to provide additional medical information.

What happens if you buy life insurance later in life?

As you get older, your circumstances and needs will change. The obligations you had when you were 20 are different when you’re 30, 40 or 50 years old.

At this point, you may have a career, own a home and have a partner or kids. It’s not just a matter of whether you’re insurable or not, you also want to: 

• protect your loved ones, 
• pay your taxes and 
• cover your debts should you pass away.

It’s not too late to buy life insurance – even in your fifties.

Think about life at that stage. Some people run their own business. Some people are homeowners. Others have accumulated personal wealth and have investment portfolios.

Now think about what happens after you die. Some things become taxable after death, such as capital gains on property. This means you may leave the beneficiaries who inherit your estate a sizable tax bill.

In the end, it comes down to the same question: what do you want to leave to your survivors?

The older you get, the more wealth you acquire and the greater the tax impacts will be. Permanent life insurance can cover these expenses, no matter when you pass away.

With life insurance, it’s important to remember that the tax-free death benefit* bypasses the estate. This means your beneficiaries will receive the benefit directly.

(*The death benefit refers to money given to your beneficiaries after you die. The exact amount of money they receive depends on how much coverage you bought.)

Your beneficiaries can then use that money any way they wish. For example, they can use it to pay:

• debts,
• tax bills,
• mortgage or rent,
• the cost of childcare,
• tuition fees,
• living expenses, and
• just about anything they want or need.

Talk to an advisor about your insurance options

An advisors’ job is to look carefully at your current situation. They want to help you make informed decisions, so you feel in control of your life, health and wealth. They can analyze your needs and suggest the right type of insurance plan to suit your: 

• age, 
• needs, 
• goals and 
• budget. 

Buying life insurance is a loving and generous thing you can do for your loved ones. And that’s a good thing at any age.