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Posted: 1 Feb '23

When Should I Buy a Life Insurance Policy?

When Should I Buy a Life Insurance Policy?

Life insurance is an essential financial saving plan that everyone should have. It will save the day if the unexpected happens, cushioning your loved ones from the financial hardships associated with hefty medical expenses and death. It also aims to eliminate any financial burden that may arise due to a lack of income or even paying debts incurred by the deceased.

So, the question remains, when is the right time to buy life insurance? The correct answer is now or as soon as possible! You don't want to wait until it's too late to purchase a life insurance policy. The earlier you buy one, the lower the premiums and the longer the time you and your dependents remain covered. We've discussed all you should know about life insurance policies below.  Call a Vistaplan advisor today to learn more.

Types of Life Insurance Policies

Once you are ready to buy life insurance, the first step is to choose the type that meets your unique needs. Here are some life insurance policy types you can choose from:

Term Life Insurance

This insurance policy is only valid for a predetermined period; hence when purchasing, you will have to select the duration when you want the insurance to last. The standard options are usually 5, 10, 15, 25, or 30 years of term life insurance coverage. Here, your beneficiaries will receive a lump sum if you pass away before your term expires. 

Term life insurance is the most practical and widely available option. Not to mention, they are more affordable than other types of life insurance policies because you are only purchasing insurance coverage and not cash-value life insurance. It is the best option for those who need life insurance protection for particular debt or circumstance. 

Whole Life Insurance

Whole life insurance is distinct from term insurance because it does not expire. When you have whole life insurance, your policy account accrues cash value. A percentage of your monthly premium will go into the saved cash value. You, the policyholder, are free to use the cash value however you see fit, including paying premiums, using it as collateral for loans, or as a source of cash. Whole life insurance is best for those who want lifetime protection and are ready to pay a premium for the policy.

Universal Life Insurance

This type of life insurance is a form of permanent life insurance with an interest-earning cash value component. Ideally, the market interest rates have an impact on the interest rates of this policy. Therefore, your premium would need to increase to make up for the difference if the interest rate paid on your universal life insurance policy fell below the minimum rate. 

Universal life insurance is a good option if you want coverage for the rest of your life. Specific variants, such as variable and indexed universal life insurance, are suitable for those wishing to link their cash value gains to market performance.

Variable Life Insurance

Your contributions to a variable life insurance cash value are placed into sub-accounts, with the possibility of moderate growth and the risk of losing money depending on the market. This option is ideal for people seeking to actively participate in their life insurance investments and wants lifetime coverage. If you have variable life insurance, you should not be afraid of taking a risk. But remember that if you make the wrong investment decisions, you could lose money on your cash value and death benefit.

Final Expense Insurance 

Final expense insurance is a type of policy that pays for all expenses connected to your passing. This also includes your medical treatment, funeral, or cremation. This policy is popular among those who aren't in good health and need insurance for funeral-related costs but don't have access to other life insurance options.

Why Buy a Life Insurance Policy?

Most people, predominantly those in their twenties and thirties, think that life insurance is for the elderly; hence, it is costly and unnecessary for their age. But in reality, the pros of having life insurance policy from a younger age outweigh the cost factor. Here are the main reasons you should get life insurance:

Financial Protection for Your Family

When Should I Buy a Life Insurance Policy?1

Having life insurance brings some financial peace of mind; this can be attributed to the fact that if illness or death occurs, your loved ones will have the financial muscle to go on with their daily lives. For instance, in a family where the sole breadwinner passes away without life insurance, the family members will be financially stranded since no one will be able to meet their financial needs.

Life insurance can come in handy during such times as your insurance provider will pay your beneficiaries a lump sum amount in the form of a death benefit. Your life insurance policy can also cover the final burial expenses; hence your family will not have to dig into their pockets for such.

Coverage for Terminal or Chronic Illnesses  

Most life insurance companies will also offer some endorsements that you can add to your current insurance policy or adjust your coverage. Such endorsements might include accessing some or even all of your death benefit amount in certain circumstances. For instance, if you are diagnosed with a terminal illness and have less than a year to live, you can use some of your death expenses to pay for your medical expenses.

It Can Supplement Your Retirement Savings

Depending on your type of life insurance, some will allow you to tap into it during your retirement years. Obtaining a universal or whole life insurance policy accumulates cash value over time in addition to the benefit. And as the cash value increase, you can decide to use it for other investments, such as buying a home or car. 

Tax Benefits

Life insurance comes with several tax benefits to both the life insurance holder and the beneficiary. For instance, if the insurance holder passes away, the dependents receive a death benefit that is not considered income for tax purposes; hence, not taxable. As a policyholder, you are also eligible for reduced tax liability if you are a salaried employee with an active life insurance policy.  

How to Choose a Life Insurance Policy   

The most customary reason most people give for not having life insurance is uncertainty regarding the amount and type of coverage to purchase. Understandably, the process is tiresome and complicated on an emotional level. In the section below, we have highlighted some factors to guide you in choosing the best life insurance policy suited to your needs. These include:


Typically, you will have many options to choose from when you are younger than when you are old. Your eligibility to buy some types of life insurance, such as basic term life insurance, expires at the age of 60 years.

When Should I Buy a Life Insurance Policy?2

Your Budget

If you are on a budget, term life insurance is often cheaper than permanent life insurance. Before choosing an insurance policy, ensure it serves the purpose, and you can comfortably afford it.  

State of Your Health

Almost all life insurance policies demand your medical history or a physical examination to determine the state of your health. Your life insurance policy will be less costly the healthier you are as an individual. The expectation is that the younger you are, the healthier you should be. 

Besides the three main factors above, the other aspects to consider before choosing a life insurance policy include your market knowledge, gender, Lifestyle, and family medical history, to name a few.

Get Started Today

Regardless of your age, income level or health status, you can secure the future of your loved ones with a suitable life insurance policy. Consult a seasoned life insurance broker at Vistaplan to ensure you pick a policy that best suit your unique needs.  


About the Author - David Motkoski

David Motkosk At the Helm of Vistaplan Financial Group

David is a well-respected insurance advisor with over 30 years of experience helping healthcare professionals, business owners, and their families secure their financial futures. He takes the time to make certain his clients understand the life, disability, and health insurance products they are purchasing, so they can make the right choices for their budgets, plans, and futures. CONNECT WITH ME ON LINKEDIN

Life & Disability Insurance for Alberta Health Care Professionals, Business Owners, and Their Families Since 1983