Life and Financial Manager, Jerry Angel, explains when and why someone should get life insurance policy. Watch the video below!
At what age should someone start looking for life insurance?
It really depends on what their goals and needs are in order to determine what the purpose of the policy is. For example, a youngster purchases a policy to have an amount of insurance for the rest of their life as a death benefit. However, there are other purposes for life policies. Some people need the money for college. On the other hand, some people want the money for retirement. Ultimately, life insurance policies work in multiple directions to be able to cover different types of needs.
The young family guy, for instance, needs the insurance because it is a death benefit situation. If he is single, he has little to no responsibility. Contrarily, the moment that he gets married and has a child he now has a lot of responsibility. A family definitely qualifies as a need in which to have life insurance. If he is still unmarried though, he needs life insurance policy to build on so as to have money for retirement.
The key advantages of using money from a life policy is it’s 100% tax-free. Instead of building a huge amount of retirement funds that will be taxed and have restrictions on them, he can use the life insurance policy. Moreover, it takes less money to build a bigger life policy, and the money is 100% tax-free. So again, the purpose of the policy matters. Therefore, a young guy without any responsibilities may very well want to start a life insurance policy for retirement. Then if he creates a family – that’s a whole other realm – and he’s going to need life insurance right away. Because if something happens to him, what’s his family going to do?
Okay, so what I’m hearing is the sooner the better. Your example of the young man suggests that regardless of one’s marital status it’s a good idea to have a life insurance policy. So for those who are single but intend on being married, would they simply alter their policy down the road when they’re married? Or do they purchase something in addition to their existing policy? How does that work?
Let’s use the same example of a young man with no responsibilities. How can life insurance play a part in his life? Considering the way the policies are today, he creates, like I said earlier, a retirement plan. With a policy – albeit not a large one – he can funnel as much money into it as possible to create a retirement income. Then when the family comes, he will need an additional policy.
Sometimes instead of permanent insurance, he may look into term insurance. Term insurance allows for a much larger death benefit with less money going out-of-pocket in the beginning. If something were to happen to him in the next 5 years, then the term insurance would supply the death benefit to take care of that need. On the other hand, the permanent policy he would be building on remains in place regardless. So if nothing happens to him, it’s there. When, for instance, his kids eventually leave home, causing his responsibilities to lessen, he puts more money into his permanent insurance that’s going to meet a different need.
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