It may feel strange to buy life insurance when you are only in your 20s or 30s but you can save a lot of money if you think ahead. This is because young people are generally healthier and less likely to die so they are a smaller risk for insurance companies.
This means that you will find the best insurance rates when you are young. In fact, insurance premiums tend to rise between 4.5 to 9% for every year that you age.
Another perk to buying life insurance at a young age is that you can lock in a cheaper premium. Usually you can maintain the premium rate agreed on at the time that you purchased your policy.
For example: If you are a 30-year-old male at the time that you purchase a $250,000, 30-year term life insurance policy, you will pay an average of $26 a month for the duration of the policy. If you are a 55-year-old male and purchase the same type of policy, you will pay an average of $166 a month.
To save money on insurance when you are older, you could seek a policy with a smaller benefit (or payout) amount and a shorter coverage term.
As benefit amounts and coverage terms decrease, so do monthly premiums.
However it is important to know that if you purchase an insurance plan with a smaller benefit amount and in the event of your death during the coverage period, your beneficiaries will not receive as much money as they could have if you had purchased a more expensive plan.
Now that you know what type of plan to buy and when, it is time to pick your plan.