We tend to feel pretty invincible when we're young. Hard won experience shows that this isn't always the case. Young adults may come down with terrible diseases or be victims of tragic accidents on a daily basis. Those gruesome thoughts aside, if you're in your 20s and haven't thought about buying a life insurance policy, you're not alone. Here are several reasons why you should consider buying life insurance now, and what you need to know to select the right coverage.
Why You Should Buy a Life Insurance Policy
Life insurance is the ultimate financial tool to prepare for those unforeseen events that can be financially devastating for those we leave behind. If you think that you aren't leaving anyone in a lurch, be absolutely certain about this. Do you have student loans or other debts that family members have co-signed for you? It would be in poor taste to leave those debts to someone as your legacy. Likewise, someone will need to pay your final burial expenses, as unpleasant as that sounds.
Many 20-somethings are married and have started families. If you're in this class, you absolutely need to have life insurance to protect the financial future of your family. The benefit from a life insurance policy can replace lost income, cover unpaid debts, and pay for your children's future education.
One of the main reasons that you should buy life insurance in your 20's is to lock in your policy. You'll receive lower rates, which we discuss below, and you can lock in eligibility. You'll need a medical exam to get life insurance, so obtaining a policy when you are young and healthy is ideal. Wait until you get sick, and you will pay more or may be out of luck.
Types of Life Insurance Policies
When you purchase life insurance, you'll have the choice between a whole life and term life insurance policy. While over 60 percent of the policies written in the U.S. are whole life policies, a term life policy might be your best option as a young adult. This is the most commonly purchased policy for younger adults for several reasons. It's considered temporary insurance, as it only lasts for the policy term, and it is much more affordable than a whole life policy. If, on the other hand, you wish to secure life insurance for the rest of your life with an investment (cash value) component, the whole life policy option is available.
The Cost of Life Insurance for 20-Somethings
The number one reason for purchasing a life insurance policy in your 20's is also the main benefit of doing so. Namely, that life insurance premiums are based on age before anything else. The younger you purchase coverage, the cheaper it will be. For example, if you elect to purchase a term life insurance policy in your 20's for $200,000 or $300,000, your premium could be as low as $15 per month. Better yet, you could keep this coverage for anywhere from 10 to 30 years. A whole life policy will have higher premiums, but again will also be much more affordable the younger you purchase the policy.
While many 20-somethings aren't thinking about purchasing a life insurance policy, this should be a priority. The cost of doing so and other protections provided by this coverage prove that waiting just doesn't make sense. Start your quote now or contact us to complete a simple needs assessment.