3 Life Insurance Mistakes You Might Make if You Apply at Too Young an Age

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  • Buying life insurance at a young age can result in lower premium costs.
  • It can also result in inadequate coverage for many scenarios.
  • If you're getting insurance at a young age, carefully consider how your circumstances might change in the future and plan accordingly.

You'll want to steer clear of these.

There's a reason consumers are often told to purchase life insurance at a relatively young age. The younger you are when you apply for coverage, the lower your premium costs are likely to be.

Forbes Advisor reports that the average cost of a 30-year, $250,000 term life insurance policy for a 30-year-old male is $276 a year. For a 40-year-old male, the cost of the same length and amount of coverage rises to $372 a year.

But while applying for a life insurance policy at a young age might help you save some money, it might also backfire on you. Here are a few mistakes you risk making when you apply for a life insurance policy when you're very young.

1. Failing to account for having kids

Let's say you buy life insurance at age 25 when it's just you and a spouse. Maybe your life plan is to not have kids because you're put off by the cost of raising them and can't imagine being in a secure enough spot financially to comfortably afford them.

But what if, during your 30s, your financial situation changes -- your income rises, you're able to boost your savings account balance, and you feel far more secure? At that point, you may decide to bring children into the world after all. But at that point, you may not have enough life insurance coverage given your new family dynamic.

2. Failing to account for future wages

It's common to calculate your life insurance payout as a multiple of your salary. So if you earn $50,000 a year now, you may decide you want to replace your annual income 10 times over, leaving you with a life insurance benefit of $500,000.

But chances are, as you progress in your career, your income will pick up. If that happens at a faster pace than you expect it to, you could run into a situation where your life insurance benefit will no longer cut it.

In fact, let's say your income rises from $50,000 a year to $80,000 a year within three years because you work hard and get promoted. In that case, you might want a life insurance benefit worth $800,000, but you'll be limited to $500,000.

3. Failing to put coverage in place for a long enough term

When you're young, it can be hard to picture the future. And so you may be inclined to secure life insurance coverage for a limited term -- say, 10 years. You might need a longer term life insurance policy to give your beneficiaries adequate protection, though. So locking in too short a term may end up leaving your loved ones high and dry.

It's a great thing to prioritize life insurance at a young age. But if you're going to apply for a policy when you're young, do your best to think about the ways your circumstances might change. You might expand your family, your earnings could pick up, and you may end up needing coverage for more years than expected.

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