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Many people think that you only really need life insurance if you have dependents. The reality is that even if you have no debts and no dependents, you will need it to cover funeral expenses. In 2014, the median cost of a funeral was $7,181, up 28.6% from 10 years earlier. It is only expected to keep rising. Additionally, dependents sometimes come later. By the time you have them, you may be too old to get the best possible deal on life insurance. Compare life insurance rates now by using our FREE tool above!
A basic rule of thumb to follow is that the younger you buy life insurance, the better. Since none of us is getting any younger, today is the best day to go ahead and shop for life insurance. But, before you do that, you first need to understand Term versus Whole Life insurance.
Term Life Insurance
Term Life is insurance purchased for a specified amount of time, thus the expression “Term Life.” For example, a Term policy may be in force for 10 years or 20 years. Because it is for a limited amount of time, it is substantially less expensive than Whole Life.
The primary reason people buy Term insurance is because they need insurance promptly, but they also have budgetary constraints.
A common reason to buy this kind of insurance is to make sure that there is coverage to help provide for dependents, usually dependent children. If a young family of limited means wants to make sure that if one parent dies, the surviving parent and their children will be okay, this is often the kind of insurance they choose simply because, in most cases, young families have very serious financial limitations.
Whole Life Insurance
Whole Life is insurance intended to provide death benefits for your whole life, thus the name. They are more expensive than Term Life policies, but they also have additional benefits, such as cash value.
The best way to get a good price on Whole Life is to get it absolutely as young as possible. Ideally, if you have children, you should get them Whole Life policies. It will be the lowest possible price and it will build up cash value they can potentially borrow against.
If you can afford the higher premiums for Whole Life, it is the best kind of life insurance to get.
Getting a Whole Life policy and keeping the premiums current is the only means to guarantee that you will have some kind of life insurance coverage at the time of your death. The older you get, the harder it gets to qualify for Term Life policies.
When Should You Get Life Insurance?
Since the rule of thumb is that you should get life insurance at the youngest possible age, but no one can go back in time to get it earlier than today, obviously the short answer is just “Buy Now.” However, let’s instead look at some life events or logical reasons why people would choose to get coverage:
- They got married.
- They had a child.
- They bought a house.
- They started a business or started freelancing.
Getting married or having a child adds dependents to your life. These events are often times when people realize they have obligations and need to consider what happens should their life be cut short.
Buying a house represents a significant financial obligation, especially if there are dependents, people sometimes want to make sure that the mortgage will get paid off in case of their death. If you start a business or start doing freelance work, you may lose insurance coverage through your job. Thus, this is a time when many people shop for independent coverage.
We have yet to invent the time machine, so you will never be younger than you are right now. Buying today is the best time to buy, but you can still comparison shop to make sure you get the best policy for your specific needs and circumstances. Compare life insurance rates now by entering your zip code in our FREE tool below!