Purchasing a life insurance well before you retire could have outsized benefits for your finances, which is why it pays not to wait!
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For those of us in the workforce, retirement might feel like a long ways away. But that doesn’t mean you shouldn’t start thinking (or dreaming) about the future now! Besides ordering a margarita festooned with a cocktail umbrella, one way to get into the retirement mindset is to look at your insurance portfolio.
In fact, we surveyed Marble members to ask them which additional insurance policy they would be most likely to consider as they approached retirement, and the result surprised us. The answer that came up the most was life insurance (according to 38% of respondents, in fact.
What surprised us about this answer? Well mostly that people were waiting that long to look at life insurance! So while you may think that life insurance has nothing to do with your retirement plans, that isn’t true. When it comes to your finances, life insurance in particular has an outsized role — and in ways that could greatly benefit you and your wallet.
The truth is, whether you’re twenty or sixty, life insurance is always a good idea — especially if people depend upon your income. And by people, we mean a spouse or partner, your kids or parents, or even your employees, if you’re the owner of a business. No matter who is financially affected if you pass away, a life insurance policy can help to ease the burden of that loss.
Some of the ways life insurance can help are:
If you don’t anticipate having children or never plan to buy a property, life insurance might not be as necessary for you. But if you think there is a possibility that any of these things could be in your future, life insurance may well be worth it.
To get into the cost of life insurance, we first need to break down the two types of life insurance you can purchase: whole or permanent life insurance, which lasts the entirety of your life, and term life insurance, which expires after a fixed period of time. Not only are the price points different, but they also have a different payout structure:
And here’s the trickier element to wrap your head around: It may seem as if the shorter amount of time you have the policy, the less you will pay; but that is not, in fact, the case. Life insurance premiums are determined by age and health, and the younger and healthier you are, the less you’ll pay in premiums. That’s why buying a plan early can save you a lot of money. The difference between buying a policy at fifty and sixty could literally be thousands of dollars.
If you think you’re better off waiting to buy life insurance until you’re older or nearing retirement age, that decision might cost you — especially if you’re buying permanent life insurance.
We understand the urge to wait on life insurance until you have a more secure and stable income, or a better understanding as to what your life will look like (kids, home, the works!). But because the cash value of a permanent life insurance policy grows over time, the longer you have the policy, the larger the payout will be.
With regards to term policies, you won't get a bigger payout if you buy a policy sooner. However, they do still tend to be cheaper if the policyholder is younger and in better shape — which is another point in favor of getting life insurance well before retirement.
And for both types of policies, the longer you wait, the higher chance there is that you develop a medical condition that could affect your premiums, or even cause your application to be declined outright.
If you purchase a permanent life insurance policy, part of your premiums will be deposited into a separate account that gains value alongside or in addition to the death benefit. Depending on your policy, you can withdraw or borrow against this cash, which means that you can even use this money to help fund your retirement. Or to pay part of your mortgage, or for something else entirely.
For those who opt to buy term insurance because these policies are significantly less expensive, you can invest those savings (along with other disposable income) as you wish. You may want to consider starting an emergency fund, especially since nearly a quarter of Americans have no savings set aside to cover emergencies.
Whether you rely solely on life insurance or a combination of different options, being as prepared as possible for unforeseen events is important and will help bring you peace of mind.
We all wish we could fast-forward to retired life, but unfortunately we have to wait (and work) it out. Fortunately, there’s one thing you can do today to set yourself (and your family) up for a pleasant retirement: explore life insurance policies.
So if you’re ready to get life insurance, Marble can help. You can shop policies, compare quotes, and even earn rewards, all from one single app. Get started today!
