The most common misstep I’ve noticed people make when purchasing life insurance is underestimating the bargain of purchasing a longer term policy.
If you’re a breadwinner who is going to need life insurance protection for 20 – 30 years or longer while your family relies on your income you will be far better served to purchase a term policy corresponding to the length of time you will need coverage, rather than buying shorter term policies and planning on replacing each policy as it expires.
The reason for this is life insurance never gets cheaper. The cost of life insurance is based on the risk of death. With the passage of time each of us draws closer to our inevitable demise – statistically, a 45 year old is more likely to die in the next 20 years than a 25 year old – which is reflected in the price of life insurance. Also, as we age we’re more likely to develop health concerns – whether putting on a few pounds, developing high blood pressure, or more serious issues – that can affect not only the price, but even eligibility to purchase life insurance.
Taking this into consideration a 30 year old individual who will need coverage throughout their working years will be far better served to purchase a term life policy locking in the cost and coverage for 30 years than to buy a cheaper 10-year policy now, another 10-year policy at age 40, and another at age 50.