When in My Life Cycle Should I Plan to Purchase Life Insurance?

In some cases, plan to purchase life insurance after having children.

Because discussions about life insurance touch on the eventual death of the policyholder, conversations about purchasing life insurance can be freighted with emotion or be just plain confusing. Understanding when in your life cycle it makes sense to purchase life insurance will help you plan ahead and may reduce some of the stress or complexity involved. Identify key life events that can trigger the necessity to purchase life insurance.

Getting Married

Plan to purchase life insurance after getting married if your current assets wouldn't be sufficient to pay debts and support a spouse should something happen to you, as recommended by Bankrate.com. If your spouse has already purchased life insurance, compare plans to determine whether it would be better to maintain the same policy or purchase something different. If your spouse's assets would be enough to address his or her financial needs should something happen to you, you may choose to defer purchasing life insurance.

Earning Income

As finances get more complicated upon entering the job market, you might plan to purchase life insurance to account for bills, college tuition or other financial responsibilities should something happen to you. Individuals with plenty of assets can purchase life insurance to decrease the financial responsibility of spouses or family members to pay estate taxes.

Having Kids

Forbes reported in 2010 that among the 35 million American households that haven't yet purchased life insurance, 11 million include kids under age 18. Adults in 40 percent of those households indicate that it would be tough to get by without earnings from the family breadwinner. Having kids can be a key moment in your life cycle when you should purchase life insurance because you'll want to make sure they're provided for if something happens to you. Purchase life insurance with payout terms extending long enough to cover family-related expenses until your kids are old enough to be financially independent.

Homeownership

Homeownership frequently adds to debt and financial responsibility, since you're probably taking out a mortgage to cover costs. Plan to purchase life insurance after buying a home if your current financial assets wouldn't easily cover liability for those payments.

Aging Parents

Even if you're single, not a homeowner and have no children, plan to purchase life insurance to support elderly or aging parents if your current assets wouldn't be able to cover their expenses and they require (or will require) financial assistance, as recommended by Bankrate.com. Talking with parents about their needs and expectations will help you determine if this is the right time to purchase life insurance.

Getting Older

Getting older isn't necessarily the time to purchase life insurance for some seniors who don't have children or other financial dependents, according to Forbes. In some cases, these life insurance policyholders may be better off letting existing policies lapse; or permanently deciding against life insurance if they haven't yet purchased a policy.

Having Information

No matter what your personal and financial circumstances, don't feel compelled to purchase life insurance without the appropriate information. Have enough policy details and specifics to make an educated consumer choice, or defer this major life cycle decision until a later date. Also, remember that life insurance policyholders can cancel their policy at any time in order to choose a different policy, so there's no penalty for planning to purchase life insurance at a particular life stage.

References

• Forbes; How to Buy Life Insurance; Emily Lambert; December 16, 2010
• Bankrate.com; Just the Facts on Life Insurance; Julie Sturgeon
• :Smart Money"; Term or Whole Life?; September 10, 2008
• Money Watch; How to Buy Life Insurance Wisely; Kathy Kristof; September 29, 2009
• BYG Publishing, Inc.; Life Insurance; Marshall Brain
• CNN Money: Top Things to Know