How old should you be to get life insurance?

By Daniel Kurt AAA
A:

There's really no pre-determined age when it suddenly becomes necessary to take out a life insurance policy. However, if there are people who depend on your income - especially children or a spouse - there's a major benefit to taking out a policy when you're young. When you take out a policy in your 20s or 30s, the provider takes into account that you're paying premiums for a number of years when, statistically, there's relatively little risk that they'll have to pay out. Unfortunately, that risk goes up a little with each passing year. It stands to reason that younger policyholders can lock in lower premiums than the aged.



However, it doesn't necessarily follow that every 25-year-old should run out and get insurance. From a financial standpoint, it really doesn't make sense unless you already have dependents. Even if the policy has an investment component - as is the case with whole life products - much of the premium is going toward insurance that you don't really need. You're probably better off putting that money directly into an investment account.



RELATED FAQS

  1. What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase ...
  2. What's the average salary of an actuary?

    Get insight into the intriguing career of risk analysis and forecasting. How much do actuaries make, and how is this field ...
  3. Who are the best-rated life insurance companies in the US?

    Learn about what makes an insurance company the best. Read about the best life insurance companies in the U.S. in 2014, following ...
  4. What are some examples of when insurance bundling is a bad idea?

    Learn about situations where insurance bundling may not be a favorable option. Bundling insurance is often a good idea, but ...
RELATED TERMS
  1. Guideline Premium And Corridor Test (GPT)

    A test used to determine whether an insurance product can be ...
  2. Cash Value Accumulation Test (CVAT)

    A test method used to determine whether a financial product can ...
  3. Noncancellable Insurance Policy

    A life or disability insurance policy that an insurance company ...
  4. Policy Or Sales Illustration

    An educational tool that shows a prospective or new insurance ...
  5. Paid-Up Additional Insurance

    Additional whole life insurance that a policyholder purchases ...
  6. Re-Entry Term Insurance

    A type of term life insurance contract that offers low rates ...

You May Also Like

Related Articles
  1. Insurance

    Should You Borrow From Your Life Insurance?

  2. Insurance

    Life Insurance: How Long Does It Take ...

  3. Trading Strategies

    How Good An Investment Is Life Insurance?

  4. Retirement

    The Smart Way To Use Life Insurance ...

  5. Insurance

    Is Burial Insurance A Ripoff?

Trading Center