Before getting married or having kids
Yeah, we know. At first glance, it makes no sense. Why buy life insurance before you get married or have kids? The reason: price. Buying life insurance is cheaper when you're young and healthy. You can lock in cheap rates by purchasing a policy a little early.
Why is that? Life insurance companies are betting you'll live through your coverage term. So, they offer better rates to young, healthy folks who are unlikely to die while covered. Some great insurance companies even cap the age at which you can buy policies.
You can take advantage of low rates by locking them in your 20s and 30s, and doing so before you develop what's known in insurance as a "pre-existing condition." In other words, it may be worth purchasing a 20-year policy now to lock in lower rates.
Shop Around: Best Life Insurance For Young Adults
After getting married
If your passing would make finances difficult for your spouse, you should consider taking out a life insurance policy for yourself and designating your partner as beneficiary. It could help them pay the bills. For example, if you pass away while you and your spouse are paying off a mortgage, your policy would help them cover the cost of housing.
Another consideration is funeral costs. Funerals are expensive, especially nice ones. You could take out a life policy, designate your spouse as the beneficiary, and ask them to use it to cover the cost of hosting a funeral. It could give both them and you peace of mind.
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After having children
The superhuman effort that goes into raising kids is no joke. For one thing, raising kids is expensive. Consider purchasing yourself a life policy and designating kids or a spouse as beneficiary. That way, you can still contribute financially to raising your kids should you pass away before they come of age.
Things a life insurance policy can help loved ones pay for:
- Daycare and schooling
- Mortgage payments
- Post-graduate education
Some parents buy life insurance for adult children. Mine did, to my surprise. I consider myself financially independent -- and told them so -- but buying a policy brought my parents peace of mind. If taking out a life insurance policy improves your mental health, it's worth considering.
Shop Around: Best Life Insurance For Families
After purchasing a home
Co-owners and family members should consider taking out a life insurance policy after buying a home. That way, beneficiaries can still make payments, even though the policyholder is no longer contributing to the monthly mortgage.
After starting a business with partners
Often, it makes sense for surviving business partners to buy out the deceased person's stake. That way, the deceased's family can get paid, and the surviving partners can continue to run the company without their interference. Buying a life insurance policy and making partners beneficiaries can provide the funds to keep a business alive.