When should I buy Life Insurance?





Term Insurance, or sometimes commonly known as Life Insurance, is a simple product that provides a lump sum benefit if the insured passes away. Many are familiar with Life Insurance, but most are not sure when they need to buy it.



So when should you buy your Life Insurance policy?


Many people mistakenly believe that they should buy Life Insurance when they are older.  They think that since they are younger, they are healthier and less likely to pass away.  But this is the exact opposite of what they should do!


Lower premiums when you are younger


When you are younger, the premiums will be cheaper and you are likely to get the standard rates. When you are older, your health deteriorates. So not only do you pay higher premiums due to your older age, you may have to pay an additional premium (also known as loading) due to your health, or in the worst case, be rejected by the insurer altogether.


For example, AIA's 20 year Life Insurance policy with a $1,000,000 coverage will cost a 30 year old HK$ 150 a month in premiums, whereas a 45 year old will have to pay HK$ 450 a month, 3 times that of the 30 year old's rate!


More vulnerable financially when you are younger


The most financially vulnerable time for your family, is when you are younger and do not have sufficient wealth for your loved ones should you pass away.                               


As you get older, you will also accumulate your wealth, pay off your mortgage and your children will become more independent. Over time, there is less need for Life Insurance to cover the shortfall in funds to support your loved ones. However, this is likely to be towards your retirement age if you have children. Therefore, the need for insurance should be lesser as you get older and more when you are younger. 


In conclusion, people should be buying insurance when they are younger, rather than when they are older.  


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