When Is the Right Time to Get Life Insurance Coverage?

Life insurance coverage offers a vital form of protection against tragedy. This type of policy pays out when a covered person dies. The money provided by a life insurance policy can help surviving family members maintain their quality of life once someone has passed and can no longer provide income or services.

But, since life insurance costs money, many people may not want to rush into buying it before they need it. The big question is, when exactly is the right time to get life insurance coverage?

Buy life insurance at a young age

Life insurers charge people less to buy coverage if their risk of dying is lower. And younger people are less likely to die than older ones. As a result, it's much cheaper to get a policy in place while a person is still young and healthy.

Insurance premiums tend to go up about 8% to 10% for each year older a policyholder is when signing up for coverage -- although the extra cost per year tends to be lower for people in their 20s or 30s and higher for those in their 40s or 50s.

Once a level term life insurance policy is purchased, though, premiums won't change for the life of the policy. So, those who want to be sure they have low-priced coverage throughout most of their adult life will want to buy it when they are still pretty young. Waiting just adds cost and increases the risk of not being able to get covered at all from a desired insurer.

Buy life insurance before pre-existing conditions develop

The Affordable Care Act requires health insurers to provide coverage to people with pre-existing conditions, but there is no law saying that a life insurance company must do the same. In fact, many health insurance companies do deny coverage to people with a variety of conditions such as heart disease or cancer or even less serious health issues like diabetes.

There are some options to get covered even when a standard whole life or term life insurance provider won't provide a policy due to an existing medical issue. For example, there is guaranteed issue coverage, which is available to anyone without regard to their health history. However, guaranteed issue policies usually set the maximum death benefit low and have a waiting period.

To avoid being limited in what types of coverage can be purchased, and to avoid paying much higher premiums out of a bank account, it's best to get life insurance before being diagnosed with a serious medical issue.

Buy life insurance as soon as there are current dependents or when there will be dependents in the future

Life insurance is intended to provide money to loved ones who depend on a person's income or the services that person provides. So, getting covered is necessary whenever there are dependents in the picture.

For example, as soon as someone gets married and makes a joint commitment to buy a home with a spouse, life insurance coverage should usually be put in place because paying for a mortgage often requires both incomes.

Those who know they will someday get married, have kids, or be left responsible for aging parents should also think about getting coverage before that happens. This way, they can get the protections for their loved ones in place before premiums rise or a pre-existing condition crops up.

The reality is, life insurance is pretty affordable and is an essential purchase for most people, so there is no reason to wait. Those who don't have coverage, but who think there's a chance of needing it now or in the future should get their policy today.