Read this before you get old!

Why you should consider taking out life insurance when you're young - and how doing so could cut your premiums...

When I say the word 'insurance', does it make you roll your eyes, yawn, sigh, groan? It's not the most exciting of topics, I admit. But whether we like it or not, insurance is important.

The trouble is, when times are tight, more of us are forced to make cutbacks. And that means financial protection such as life insurance tends to get pushed to the very back of our minds.

Young people seem to be particularly good at this. Indeed, according to LifeSearch, the number of young people buying life cover and other forms of financial protection is at an all-time low.

Now I'm not saying that every single young person will need life insurance (more on this later). But the funny thing is, the younger you are, the healthier you're likely to be. And that means the amount you pay each month (the premium) is likely to be lower.

In fact, life insurance, critical illness and income protection are just three policies that are less expensive for young people (age 25 and under).

Weighing up the costs

Let's look at an example: Tom is a healthy, non-smoking 25 year old and decides to take out life cover of £100,000 over a 30 year term. Using our life insurance search engine, Tom discovers he can get a policy for just £6.41 a month.

His friend Harry is 15 years older. He is also a healthy non-smoking male, but he decided to wait until he turned 40 before he applies for life insurance. Using our search engine, he finds he can get a policy for £9.71 a month over a 15 year term. (The term is 15 years shorter than Tom's because Harry is taking it out 15 years later.)

As you can see, because Tom takes out his policy at the age of 25, his premium is a fair bit lower than Harry's -- £3.30 a month, or £39.60 a year, to be exact. Admittedly, the difference isn't huge, but it all adds up.

So let's see how the total costs compare over the next 15 years when they are both paying for policies.

NB: Actual premiums will be dependent on individual circumstances. The amount of cover stays level throughout the term of the policy and the premiums are guaranteed (i.e. their cost is not reviewed every few years). Research undertaken on 9th March 2009.

As you can see, during the next 15 years, Harry will be paying out £594 more than Tom. Now that's a lot of money.

Of course, Harry will end up paying out less money overall, because he will only be paying premiums for next 15 years, while Tom will continue to pay for a further 15 years after that (so 30 years in total). But don't forget that Harry didn't have any protection until he turned 40. That's a risk that Tom, at the age of 25, doesn't want to take.

Remember, your own premiums will depend on your individual circumstances - you may pay more or less than Tom, depending on factors such as your gender and your health as well as your age.

Should I bother?

So we've established that, by taking out a life insurance policy at a younger age, your premiums will be lower. But then again, because you're still young, you may not yet have any financial dependents, such as a partner or children. And as a result, you have less need for life insurance.

Don't wait

Of course, if you're young and you do have financial dependents (such as children) taking out life cover should be at the top of your list of things to do. Similarly, if you have a joint mortgage, you should protect your life to ensure your partner could meet the monthly payments if you died.

Don't keep putting it off. By waiting until you're older to apply for life cover, you're taking a risk with your family's future. Just think: should the worst happen, would they be able to cope financially without you? Is it really worth taking this risk just to save a bit of cash?

What's more, as you get older, you may find your health worsens and it could become a lot tougher to find a reasonably priced premium. In some cases, if your health has significantly deteriorated it may even be hard to find someone to insure you at all.

So yes, the earlier you start your policy, the more you pay out in the longer term -- but I think that's a small price to pay to protect the people I love from the unthinkable. Especially when it costs just a few pounds a month.

What are you waiting for? Compare life insurance with us to find the best policy to suit your needs.

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The comments above are the opinions of the author only and do not represent advice specific to your circumstances

This article has been approved and issued by Direct Life & Pension Ltd who are authorised and regulated by the Financial Services Authority.

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