What does life insurance cost?
It’s probably safe to say that most people, when asked, would say that, yes, life insurance premium rates increase with increasing age. And they would probably agree that premium rates, regardless of age, will increase when there are serious health conditions or occupational risks.
So, when is the best time to buy life insurance? I will sometimes ask a prospective purchaser when they plan to die. Knowing that specific date, we can apply and put the policy in force the day before they die. The return on the premium paid is enormous!
That approach usually elicits a chuckle. So, I answer my own question by saying that age 18 would be a good time to purchase a policy. We expect 18-year-olds to be healthy and the premium rates are about a dollar per thousand per annum.
Youth have other priorities at that age. However, parents should consider purchasing life insurance on their sons and daughters. Why? Not because they are expecting any offspring to die soon but, rather, to protect their insurability.
They should consider purchasing low-cost, convertible term life insurance because their offspring may get married and have a family. If so, they need to protect their spouse and children — and college education(s) and mortgage, etc. And what would be the situation if the young person got married and, before or after the marriage, they became uninsurable?
A recent applicant asked me to provide a $100,000 term life insurance policy on her daughter who had just graduated from college and who had an $85,000 balance in college loans. For a $95 annual premium, the parent could ensure that the loan would be repaid.
The moral of the story? Buy life insurance when young and healthy for many good reasons.