When to buy permanent life insurance? That is a good question. Some agents recommend buying permanent life insurance for every policy. Some financial consultants recommend never buying permanent life insurance. Both have some valid justifications, but both are rather extreme positions.
In real life, with budget limitations, health risks, bear markets, and other considerations, it is hard for me to recommend only one option. Not everyone can afford all the life insurance they need in permanent coverage. Yet buying only term presents the risk of being unable to qualify for a new policy when the current one expires. Putting money in the stock market and savings plans should cover final expense needs, eliminating the need for permanent life insurance. But will those investments and savings be there when you die?
My recommendations are to buy Term insurance for temporary needs, and Permanent insurance for lifelong needs. Specifically, permanent insurance is best for final expense needs such as funeral, burial, paying off credit cards, and other costs associated with putting the deceased to rest. Permanent insurance is recommended if you want to use the policy proceeds to pay estate taxes, pass money to heirs, or bequeath money to a charity. If you use term insurance for any purpose that may find you "outliving the term", you may find that you no longer qualify for a new policy, and that all your plans for your life insurance are moot.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
When to buy a permanent life insurance policy?
When you have a long need for coverage, say 20+ years...
When you want the features a permanent offers.
At as early an age as possible to take advantage of lower costs and a longer growth window.
When you want the lowest cost coverage over the longest period of time.
When you want control of the policy you purchase.
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In real life, with budget limitations, health risks, bear markets, and other considerations, it is hard for me to recommend only one option. Not everyone can afford all the life insurance they need in permanent coverage. Yet buying only term presents the risk of being unable to qualify for a new policy when the current one expires. Putting money in the stock market and savings plans should cover final expense needs, eliminating the need for permanent life insurance. But will those investments and savings be there when you die?
My recommendations are to buy Term insurance for temporary needs, and Permanent insurance for lifelong needs. Specifically, permanent insurance is best for final expense needs such as funeral, burial, paying off credit cards, and other costs associated with putting the deceased to rest. Permanent insurance is recommended if you want to use the policy proceeds to pay estate taxes, pass money to heirs, or bequeath money to a charity. If you use term insurance for any purpose that may find you "outliving the term", you may find that you no longer qualify for a new policy, and that all your plans for your life insurance are moot.
When you have a long need for coverage, say 20+ years...
When you want the features a permanent offers.
At as early an age as possible to take advantage of lower costs and a longer growth window.
When you want the lowest cost coverage over the longest period of time.
When you want control of the policy you purchase.