Ideally, it is better to purchase life insurance when you are young, healthy and anticipate the need for it. However, most ideals are not part of reality. When purchasing life insurance- more than any other financial product- timing is everything. There are several factors that would impact the timing of your purchase as well.
1) If you’re anticipating a change in marital status: Once you are planning to get married and start a family, you should get life insurance now. Getting married is a common trigger event. No longer being single means that you have a responsibility to your spouse. Life insurance is one method of honouring that responsibility.
2) If there will be an increase in number of your financial dependents: Having another child would have a significant impact on your insurance need. If a child is on the way, your responsibility to your family increases. This is another trigger event that is very important in timing your purchase.
3) Planning to own a home or engaging in business activity: Most commercial loans and mortgages require life insurance. When these are in your short-term plans, you should acquire life insurance. It would be unfortunate to overlook this as a reason to purchase a life policy at an earlier stage.
4) When your insurability is higher: Your insurability is not necessarily higher when you are younger. For example, a person who has a habit like smoking would have a lower insurability relative to a non-smoker. If the person abstains from smoking for at least a year, they would obtain preferred rates from most insurers. This would be the ideal time to purchase insurance. It is better to purchase life insurance when you have good health and good habits as well.
5) Before your age changes: If you are going to buy life insurance, do so before you become a year older. Generally, insurers consider you as old as the age you are nearest. For example, if you are 40, then the insurer would only consider you 40 until six months after your 40th birthday.
6) Permanent employment: Payment of life insurance is a long-term commitment. You should acquire life insurance only when you are able to finance this long-term commitment. Otherwise the policy would lapse and you’d lose. Due to uncertainty about the future, it is best to acquire a life insurance policy as soon as you become permanently employed.
It is safer and more prudent to purchase life insurance earlier than later. There are certainly events in your life that would either increase or reduce your life coverage need. The importance of timing your life insurance purchase is clear. It is invariably better to anticipate your life insurance needs, since you would spend less for more value in the long-run.