Should I Get Life Insurance in My 20’s? Here’s Why It’s a Great Idea

Many 20-year-olds may share a vehicle with their spouse or loved one. Often, these younger individuals do not own their vehicles outright, instead making monthly auto loan payments. Life insurance policies provide funds to help cover the remaining debt on auto loans and other associated costs should a person die before they pay off the balance.

At the age of 20, many people have already racked up considerable student loans, especially if they entered college directly after high school. Investing in a life insurance policy removes the possibility that loved ones left behind will have to find a way to pay off their remaining student debts.

While not all 20-year-olds have a mortgage, those that have begun investing in real estate should also invest in a life insurance policy, especially if others live in the home. The policy provides funds to relieve remaining mortgage payments, ensuring that loved ones don’t lose their home while also losing a family member.

If an unexpected passing leaves behind a spouse or dependent, they may shoulder the financial burden of losing their loved one’s income. A life insurance policy helps cover this income loss and provides a regular lifestyle for those who remain after a loved one dies.

As the name suggests, this type of life insurance covers a certain number of years, most commonly between 10 and 20. Throughout the term, the covered person pays a life insurance company a monthly premium for a death benefit payout in case they die. If the term expires and the covered person survives, they can renew the policy, though renewals often cost more than the original premium.

20-year-olds may choose a term life insurance policy for coverage to take advantage of the extremely low insurance costs and high payout.

Permanent life insurance covers a person as long as they pay into it. These life insurance policies have a higher monthly premium than term life insurance. However, paying into permanent life insurance policies builds up an investment that offers a cash value to the client.

Permanent policies can act as a retirement account and offer a death benefit to loved ones for funeral expenses. Other people use them for estate planning, or the process of distributing financial provisions to beneficiaries upon a person’s passing. There are many moving parts to a permanent life insurance plan, be it in term or permanent policies. Learn more about the inner workings of a life insurance policy here.

The younger a person begins paying into a life insurance policy, the lower the annual premium. In fact, more and more parents are considering purchasing life insurance policies for their children. As a person ages, the likelihood of dying grows, raising the policy payments. In addition, women tend to pay less for life insurance because they have a longer life expectancy than men.

When considering life insurance for a 20-year-old, think of all the financial burdens loved ones may deal with in the event of an unexpected death. The death benefit, or amount of life insurance coverage, can vary from as low as $20,000 to as much as $500,000 or more. Take into account current financial debts and potential future ones, such as expecting to purchase a home or planning to go back to school.

Higher life insurance payouts cost more, though remember that a life insurance policy covers everything from current debts to funeral expenses. Purchasing a policy with too low of coverage may endanger family members’ financial standings in the event of an unexpected passing.

The more time a policy covers, the higher the annual premium. Consider current financial situations when investing in life insurance. Many people begin their life insurance journey with a term policy and move into permanent policies as they get older.

Healthier individuals tend to pay less for life insurance, sometimes receiving discounts others don’t qualify for. Life insurance companies reward healthy living, such as people who avoid smoking and pay attention to their diet. Choosing an unhealthy lifestyle habit such as smoking makes securing life insurance a little more cumbersome. While it’s possible to secure a life insurance plan as a smoker, premiums will be considerably higher. Some life insurance companies request a physical exam to take measurements of common health problems like blood pressure and cholesterol levels.

Those with family medical histories that include unavoidable health issues like cancer or diabetes may have to pay higher premiums. However, the more a person proves they care for themselves, the more likely a life insurance company will work to lower the payments. Other lifestyle considerations may include criminal histories and car accident records.