5 Reasons To Purchase Life Insurance At A Young Age

Funeral Costs

Everyone should carry a whole life policy equal to at least the average funeral costs in their area. Whole life serves as the ideal vehicle because it provides permanent coverage with predictable costs and cash-value appreciation. A funeral cost policy should account for inflation. For example, if the average funeral cost today is fifteen thousand dollars, a young person should buy a twenty-five thousand dollar policy, since, god willing, a funeral won't be needed for many decades when prices will be much higher. In some cases, a younger person may find the cost of a whole life policy too high, especially if dealing with family expenses and needing a twenty- or thirty-year term-life policy.

The solution is a term-life policy with a conversion option. Since the term life policy provides more than enough coverage for the funeral cost, it serves that purpose temporarily, and the insured can convert a portion of the term policy to whole life at a later date. For example, they could convert twenty-five or fifty thousand dollars of a 500,000 dollar term-life policy to whole life. This can be done with no medical underwriting, so the conversion remains possible even if the insured develops a serious medical condition.