How to Get A Life…Insurance Policy!

Posted on by George Murphy

Why 20 Something Year Olds Should Buy ASAP

Most 20 something year olds can name several reasons off the top of their head why not to spend money at this point in their life. Student loans, car and health insurance payments, and rent; the list goes on.

Everyone at every age should have life insurance, but the reason this specific group of people should be buying life insurance right now is because the rates will almost never be better in their lifetime.

Why? Being young with a fast metabolism and having an overall good health means the risk of death is lower (and therefore needing to use this life insurance) than somebody of older age who has already developed diabetes, heart problems, etc.

Isn’t life insurance to leave money behind to my husband/wife and kids? Yes and no. Life insurance helps cover funeral costs, which can range upwards of $10,000. Any credit card debt, along with those student loans and outstanding balances will also fall upon your family, even if you have no spouse or children. In essence, life insurance helps prevent your passing along any debt along to your loved ones.

If you’re under the age of 25, you’re in for an even better deal. The insurance companies consider you an adult once you reach that age, therefore purchasing life insurance anytime before the age of 25 will likely secure you the lowest rates possible.

Two Main Types

Term Life Insurance

-Set Period of Time (i.e.: 10 years)

-Lower Premium (Will Be Higher Once Term Ends & Purchase New Term Policy)

-Ideal for Insuring Completed Payments (Mortgage, College, etc.)

-Can Replace Lost Potential Income (Lump Sum, Not Multiple Payments)

-Tax Free (If Structured Properly)

 

Whole Life Insurance

-Permanent, Entire Lifetime Coverage

-Higher Premium (Fixed Price)

-Cash Value (Can Be Borrowed Against)

-Ideal for Planning Beneficiaries Financial Security

-Tax Free (If Structured Properly)

Factors Determining Rates

We mentioned risk, and that’s what life insurance truly focuses on. How much risk you face at various stages of your life will affect the rates you will be offered. Factors such as your weight, medical condition, smoking, drinking, and even your hobbies and career will play a part! (Astronauts cannot get life insurance, and frequent scuba divers/rock climbers/etc. will pay higher rates.)

Insurance companies typically categorize your risk level in order to determine the rates you’ll receive. They tend to be based off overall health (often including comments about cholesterol, smoking, family medical history) & risk level life style. Categories might be split into substandard, standard, preferred, and preferred plus.

Reduce Your Offered Rates

Since a risky, unhealthy lifestyle can drive the rates you’re offered up, the opposite can help bring them down! Join a gym and exercise regularly, organize an office team for a local sport or healthy event like a 5k (great publicity!), and keep the risky events sporadic (that’s right, you can dabble here and there and still get good rates.)

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