Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.
- Eric Rosenberg purchased a $US1 million term life insurance policy at 28 years old.
- Life insurance costs generally go up as you get older, but getting a policy earlier in life can lock in a lower monthly rate for the duration of your coverage.
- Rosenberg got his policy in his 20s, before he had children. Now that he has two kids, he sometimes wishes he had a bigger policy that could pay for their college and mortgage.
- Visit BusinessInsider.com for more stories.
In 2014, I decided it was time for life insurance.
While this is one of the least sexy parts of personal finance, it is a very important one. It was before I had kids and I didn’t even own a house at the time, but I planned ahead and picked up a $US1 million policy at 28 years old.
Read more to find out the reasons why and what I would do differently today.
Life insurance only gets more expensive with age
Talking about things like death and dying are never fun, but it is a reality we all have to cope with at some point. If you were to die today, would the people you care about be ok?
I picked my life insurance policy to protect my wife from the loss of my income as well as any future kids.
While my wife alone could easily use her job skills to pay for her life, it might have been at a lower standard than we were living at the time. I also wouldn’t have ever wanted to put her in a situation where she was supporting a family on her own. While this is all too common today, it would be much easier with an extra seven figures in the bank.
The timing of getting life insurance was important to me. Outside of the non-portable policies I got from work, I knew that a new life insurance policy would only get more expensive over time. I picked term life insurance as it gives you by far the best bang for your buck compared to the monthly cost.
With term and other life insurance, your monthly cost is locked in when you sign up for the policy, but that monthly cost goes up over time as you age. It makes sense, as older people are more likely to die than younger people. But if you lock in your rate while you are young, you lock in a lower cost than someone who waits five or ten years past your current age.
New risk factors can drive up life insurance costs
Since signing up for my 30-year term life insurance policy, some risk factors emerged that would make insurance even more expensive for me today.
In addition to being five years older, my Dad was diagnosed with cancer and I decided to earn my private pilot licence.
Both health risks and activities like flying planes can make life insurance premiums more expensive. But again, they were locked in when I was 28, before my dad was sick and before I had ever considered hopping into the cockpit. No one plans on a cancer diagnosis, but if one happens to your parent or sibling, it could mean a higher risk for you and higher monthly insurance costs.
If you plan to get life insurance at some point, signing up for it now is probably the cheapest price you’ll ever get.
How much life insurance do you need? Find out with this calculator from our partners:
It is never the wrong time to protect your loved ones
Group life insurance from work is usually a really good deal. You’ll pay less per thousand dollars in coverage with a group policy than most individual policies. But those kinds of insurance are not portable. That means you lose them if you leave your job.
Getting your own life insurance policy guarantees your family will be protected no matter what happens to your job. As long as you make the monthly premium payments, you have the policy as long as the term lasts.
Because of the risk factors I mentioned above and my ripe old age of 33, I know that it would cost me a lot more than the rate I got back when I was a young, healthy 28-year-old. Even if you don’t have a partner or kids today, plan far ahead when it comes to your life insurance.
Plus, I could have died in the last five years. I’m glad I didn’t. But even if I had, my family was covered.
If I could go back, I might have picked an even bigger policy
I picked a $US1 million policy because, based on our expenses and lifestyle at the time, it would have easily covered at least ten years of expenses not taking into account any investment gains on the proceeds. But now that I actually have two kids, I sometimes wish I could go back and get a bigger policy that would have paid for college and a full mortgage payoff as well.
In no way have I ever regretted the policy I have. I qualified for the second-best rate tier and pay $US78 per month every month.
I hope my family never gets the $US1 million. But if something happens to me, I’m not worried about my family struggling to pay the bills.
That, after all, is what life insurance is all about.
Business Insider Emails & Alerts
Site highlights each day to your inbox.