Life Insurance in Your 20s: What No One Ever Tells You
When you’re in your 20’s, life insurance may be the last thing on your mind — after all, isn’t that something that people only get when they’re married and settling down with a house and kids?
Not at all. In fact, there are several advantages to getting life insurance in your 20s, many of which you may not even realize. Here’s what no one ever tells you about buying life insurance when you’re still young.
You Won’t Always Be Young (or Single)
Many young people in their 20s think they have their whole lives ahead of them. But you won’t always be young and you likely won’t always be single. You may decide to get married and have children, and when you’re providing for a family, you’ll need certain safeguards in place to help you financially should the unexpected occur.
If you’re the kind of person who likes the security of building up your savings (scant though they may be when you’re young), think of life insurance as a kind of “safety net” to help provide an added layer of monetary peace of mind while you are young and healthy, the reason being:
You’ll Get the Best Deals When You Start Early
By acquiring life insurance in your 20s, you’ll be given a much better deal than, for example, someone in their 50s. This is because while you’re in your 20s and relatively healthy, you’re considered a low risk, so insurers are likely to make your life insurance prices lower because you aren’t weighing down the system.
By starting early, you essentially get a foot in the door and have the ability to pay less than if you had applied for life insurance later in life. Plus, although no one wants or likes to think about it:
Life Insurance Can Take Care of Certain Debts In the Event that You Pass Away
One of the biggest weights on the shoulders of twenty-somethings is student loan debt. Often, student loan debts can range from $20,000 or more, which is a significant burden that many young students are saddled with as soon as they graduate.
Depending on the type of student loan debt you have, your life insurance may cover it in the event of your death. This includes federal student loans and Parent PLUS loans. These types of loans are automatically canceled and discharged.
It’s worth noting, however, that if you have private student loan debt or your parents co-signed for your loan, the lender may still expect them to pay for the debt. Although co-signers legally share equal responsibility for the debt, having a life insurance policy could let your parents pay off the remainder of the debt.
Life Insurance Can Help Replace Lost Income
This is one of the major benefits to owning a life insurance policy, especially when your 20s turn into your 30s and 40s and you make lasting plans for the future, such as getting married, having children, buying a home and so on.
In the event that something should happen to you, a life insurance policy can help provide income for your family so that they are not suddenly without the financial stability they need to survive. For example, a life insurance policy may be able to pay off your mortgage or other debts so that your family can start to rebuild their lives without worrying about financial hardships.
But beyond the death benefit, many life insurance policies may also help cover certain life-changing ailments or accidents, such as paralysis or cancer. This can be a fantastic option in cases where your life is dramatically changed and you are unable to continue working.
And while these are considerations that will need to be dealt with after you’re gone, there’s still the very immediate concern that:
Final Expenses Cost More than You Might Think
The average cost of a funeral in the United States is $9,000, and that doesn’t include all-important features like flowers or a grave marker. Even cremation can cost upwards of $6,000. Regardless of your final wishes, that’s a significant investment and certainly not something that you want to leave behind for your family to deal with.
Having the right life insurance policy can also help take care of your final expenses. Even a small policy is better than no policy at all, since you can always upgrade it later as your needs (and the needs of your family) change and evolve.
Term versus Permanent Life Insurance: Which Life Insurance is Better for Twenty-somethings?
One of the most common questions regarding life insurance is understanding the difference between term life insurance and whole life insurance. The truth is that there are several types of life insurance that fall under both terms, but to keep things simple:
With term life insurance, you buy insurance for a specific time period that is designed to cover a specific set of possible issues. It’s typically a lower cost policy that lasts for a set amount of time, like 20, 30 or 40 years. Like all insurance policies, the insured can name a beneficiary to receive the payment if they do not outlive the policy.
In cases where the insured is critically injured or dies, the policy will pay out its value to the beneficiary. There are also term life insurance policies that allow for the return of premiums, which are paid back in the event that the insured outlives the term. These types of policies are more expensive than plain term life insurance policies.
There’s also permanent life insurance, which builds cash value over time that you can borrow against if you need to. Under the umbrella of “permanent life insurance” are options including whole life, universal life, indexed universal life and so on.
The way that these life insurance policies earn cash over time depends on how they are invested. For example, indexed universal life insurance is indexed more aggressively but has the potential to build more cash faster than universal life.
When an insurance policy “builds cash value”, this means that a portion of your payment is invested, and the degree at which it grows will depend on the type of permanent life insurance option you get. This way, as you continue to pay your life insurance premiums, you’re also building an investment over time that you can use in the future to pay off bigger purchases such as a wedding, a vacation or a new car.
Taking the Next Step: Getting Life Insurance Quotes
As you can see, there’s a wealth of options available for someone in their 20s to get life insurance, as well as numerous reasons why it’s a good idea. Of course, it’s also understandable that you may have many questions and need some clarification in order to create the best plan for your personal needs — now and in the future.
Fortunately, LifeShield can help. With a wide range of life insurance plans to suit every need and budget, we can help you get the most out of your life insurance plan whether you’re just starting out on the road of life, or you’re looking to plan well into the future.
We shop multiple life insurance providers to help you get the best possible deal on the plan that’s right for you, both today and tomorrow. Learn more about our detailed life insurance solutions or call one of our friendly, no-pressure insurance experts today to have all your questions answered!