will indicator light turn on when it time to replace break pads

I don't think there's a indicator light that tells when the brakes are worn out, But some brake pads have a metal strip that will omit a chirping sound when the pad is nearing the end of its usable life

There is an indicator light on the dash. It will be amber (yellow for you public school kids) or red depending on what is wrong with the BRAKE system. The light is a circle surrounded by three semi-circles or dashes on either side. This light means you need new brake pads on the front of your car....you should replace the rotors as well because they are what we call in the auto business "free floating" rotors. The rotors are very easy to replace. Bleeding BMW brakes is a bit time consuming, but brakes are probably the most important system on a vehicle.

The indicator light should turn on as described but the sensor is only on one brake pad on the front and one brake pad on the rear. Your car has 8 brake pads total (2 on each wheel) and they can sometimes wear unevenly. It is possible that one of the other pads that doesn't have a sensor is worn almost to the backing plate. Either way you do have to replace the rotors when you change pads as they get too thin so I wouldn't worry about it too much until the light comes on or you start to hear a grinding noise. Just be aware that as soon as you hear that grinding you should get to a shop relatively quickly :)

The light should come on when your pads need replacing. The problem that I found when getting my brakes done at a non-BMW place is that when they replace the brake pads, they also have to replace the sensor as well. For example: I got new brake pads put on my M3 at a brake shop but the light didn't go off. The light kept coming on saying that I needed brakes when I didn't all because of a bad sensor. So why they say you need brake pads even though the light hasn't come on? That's 50/50. When in doubt, take it to the profesionals!