In personal finance we often say the best time to buy into the stock market was years ago… the second best time is now. For many people, buying life insurance is the same way. I should stress the “many” there, because not everyone necessarily needs life insurance. Let’s put aside “now” for now and get to some of the other best times to buy life insurance.
I think there are four major times in your life to consider buying life insurance. In my opinion one of them outweighs all the others. I’ll lead of with it because it’s when I bought life insurance:
1. When You Become a Parent
Creating and/or caring for very little human lives is kind of a big deal. After all, a career in baby modeling is kind of a long shot. They need someone to take care of them. Ordinarily, it’s a difficult job to do. It’s much more difficult if you are not living. Maybe a spouse or partner can do it, but they may need to work. That’s when it comes in handy to have a bunch of money around. Suddenly day care and babysitters are one less thing to think about.
2. When you Buy a House
As one real estate agent said to me, “A mortgage is an obligation.” I think he went on to say that if I died my estate would have sell the condo to pay back the bank. At the time, I was fine with that because I wouldn’t need the condo any more since I wasn’t living in it. However, what I didn’t know at the time was that the housing market was going to collapse. My property lost more 40% of it’s value. If I had died around that time, my estate would have to come up with the $80,000 difference.
Fortunately, I had decent assets in my retirement accounts at the time, so I decided against buying life insurance.
Double fortunately, I didn’t die and the housing market mostly recovered.
3. When you Start on Your Own
When you leave your parents’ nest and have to live on your own, it’s worth looking into buying a small amount of life insurance… enough to cover funeral services. The idea is not to be a financial burden on your loved ones. This came up in the comments of my previous article, and I dismissed it. My thinking was that you can always plan for a frugal funeral if that’s your concern. If you do that and keep an emergency fund of a thousand or two you should be fine. In fact, perhaps you have possessions like a used car that could be used to pay for funeral services.
I had some people say that I shouldn’t dismiss the costs so quickly. Out of respect for their opinions, I include this on the list.
4. When You Become a Parent (Part 2)
You’re not imagining things, this is a re-run of #1 above. However, in #1, I was talking about buying life insurance for yourself. Instead, I’d like to talk about buying life insurance for your child. It may sound silly buying insurance for a baby. I thought it was silly the first time I read about it here. However, take a minute and think about it. I know it’s difficult, because it’s essentially the worst thought to have in head. However, not thinking about it doesn’t make it go away.
What if you did lose your child? Would you be able to work? I can’t imagine that I’d be able to focus very well. If you have an understanding employer perhaps you can get some time to grieve. Money isn’t going to heal those wounds. However, it can buy some time to try to put your life back in order as best you can.
Can you think of other times that are great for buying life insurance? Let me know in the comments.
The above article is sponsored by Midland National. If you are in the market for life insurance they have a great BBB rating. Even though this is a sponsored article, these are my own words and thoughts.