Should You Purchase a Life Insurance Policy in 2023?

It could be a smart move for some.

Life insurance can be a valuable financial protection to have, but it also comes with yet another monthly payment. And it's not something everyone needs. So before purchasing a policy, it's smart to think about whether it's actually worth it. Here's what you ought to consider if you're deciding whether to buy a life insurance policy in 2023.

When does life insurance make sense?

Life insurance is intended to provide financial support for the policyholder's family members following their death. Term life policies pay the beneficiaries if the policyholder dies within the policy term, which only lasts for a certain number of years. Permanent life insurance policies pay out a death benefit whenever the policyholder dies, and some allow policyholders to tap their death benefit early to help cover end-of-life costs, among other things.

Life insurance is most common among people with dependents, including those with minor children or disabled family members. Those without dependents probably don't need to purchase a life insurance policy in 2023. They can wait until they have people who are dependent upon their income. Or they might be able to skip life insurance altogether if they choose.

When's the best time to buy life insurance?

Those who plan to buy life insurance are often best doing so when they're young. Premiums are based in part on the person's age when they sign up and younger, healthier people pay lower rates than those who are older. That's because younger people have a lower risk of dying, so there's a smaller chance of insurance companies paying out the death benefit.

Buying a life insurance policy in 2023 could turn out to be much more affordable than waiting a decade to buy one. So those who think they may want life insurance someday may prefer to lock in a lower rate before their life insurance premiums become prohibitively expensive.

How to get started

The first step in purchasing a life insurance policy for 2023 and beyond is to figure out which type of policy is best. This depends on an individual's circumstances and their budget. Term life insurance is the most affordable option for most people, and many companies enable policyholders to convert a term life policy to a permanent life insurance policy later if they choose.

Next, policyholders should think about how much coverage they need. This will again depend on each person's financial situation. Ideally, the death benefit should enable family members to pay off any remaining debts to help ease the burden on those left behind.

Then, it's time to get quotes. Compare rates from several top life insurers to see which offers the best coverage at the lowest cost. It's worth checking into each company's customer service as well to make sure they're not too difficult to work with.

Most companies will require applicants to complete a health questionnaire and possibly a medical exam before their policy goes into effect. If the exam turns up a condition the insurer wasn't aware of, this could affect the premium cost.

Finally, the applicant pays for their policy and it goes into effect. As long as they stay current on their premiums, their beneficiaries will get the agreed-upon death benefit should the policyholder die.

It's a good idea for everyone -- whether they already have life insurance or not -- to review their life insurance needs annually. Those who decide they need to purchase a new policy or add more coverage should do so as soon as possible so they can take advantage of the lower costs available to younger policyholders.