There's really no pre-determined age when it suddenly becomes
necessary to take out a life insurance policy. However, if there are
people who depend on your income - especially children or a spouse -
there's a major benefit to taking out a policy when you're young. When
you take out a policy in your 20s or 30s, the provider takes into
account that you're paying premiums for a number of years when,
statistically, there's relatively little risk that they'll have to pay
out. Unfortunately, that risk goes up a little with each passing year.
It stands to reason that younger policyholders can lock in lower
premiums than the aged.
However, it doesn't necessarily follow that every 25-year-old should run out and get insurance. From a financial standpoint, it really doesn't make sense unless you already have dependents. Even if the policy has an investment component - as is the case with whole life products - much of the premium is going toward insurance that you don't really need. You're probably better off putting that money directly into an investment account.
However, it doesn't necessarily follow that every 25-year-old should run out and get insurance. From a financial standpoint, it really doesn't make sense unless you already have dependents. Even if the policy has an investment component - as is the case with whole life products - much of the premium is going toward insurance that you don't really need. You're probably better off putting that money directly into an investment account.