Behavioral Economics and Employee Benefits – What can we learn and apply?
No matter how old you are, there are many benefits of life insurance. It can be a key component in the financial safety net we all try to weave for ourselves and our loved ones.
If you’re keen on maximizing the benefits of life insurance, the earlier in life you can get it, the better. Here are a few reasons why:
The Younger You Are, the Less You Pay
Insurance companies use a bunch of different metrics to come up with prices for life insurance policies, but the most decisive factor is age. In this case, that means the younger you are, the less likely you are to die (woo hoo!)—hence, the lower your premiums. And just a few years can mean a huge difference in cost. Premiums for 35-year-olds are reported to cost 27 percent more than those for a 25-year-old.
The idea here is that you can lock in a sweet rate while you’re young, and still pay that same amount in perpetuity—regardless of what happens to your health. As opposed to someone who waits until they get sick and then scrambles to find coverage.
Keep in mind that some policies allow the purchase of additional insurance in the future based on the rate you originally paid, based on your health at the time.
The Earlier You Purchase It, the More It Accrues
If you opt for a permanent or whole life insurance plan (as opposed to term life insurance, which covers you for a certain period of time), your premiums incorporate a cash value component. This means that the money you pay each month accumulates over time, and you can withdraw it down the road if you have a sudden need for cash. Ergo the earlier you purchase it, the more you’ll accrue, and the more benefits of life insurance you can have access to.
Keep in mind any cash you withdraw from your permanent life insurance fund will cut into the original amount your policy was worth, but it’s nice to know that you can access the money and it will be there if you need it. It’s a safe way to protect yourself and your family and guarantee a return on your investment.
The ‘Living’ Benefits of Life Insurance
Most people think about life insurance in terms of payouts to beneficiaries after death, which is certainly a key aspect of life insurance, but there are benefits of life insurance you can enjoy while still here on earth. Not the least of which is the peace of mind that financial protection offers.
Not having to sit up at night, worrying what will happen to your loved ones is a good thing. It’s great to know they’ll have what they need, no matter what.
Of course it’s also nice to know that you’ll have what you need, no matter what. If you sign up for a permanent life insurance policy at a young age, down the road you’ll be able to withdraw money for retirement, a wedding, somebody’s education, a business venture, or whatever life brings your way.
Hopefully it’s a Corvette.
Whatever it is, take some time to figure out which life insurance policy is right for you.
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