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

Feb 23, 2023 | Insurance, Life Insurance

At 20 years old, many people don’t consider life insurance a priority. After all, most 20-year-olds still have a lot to figure out about their future, including who to settle down with and what they’re doing with their life. However, life insurance for a 20-year-old offers protection for any family members who would handle the affairs should a young person die unexpectedly.

Learn about why 20-year-olds should consider life insurance policies, the cost of life insurance for a 20-year-old, and answers to frequently asked questions regarding early life insurance investments.

Why Does a 20-Year-Old Need Life Insurance?

Anyone with family members, spouses, or dependents should take advantage of a life insurance policy to provide coverage for debts, living expenses, and funeral planning in the event of an unexpected death. Accidents and sickness can happen at any age, so providing financial benefits for those left behind helps lift the burden of a young person passing.

Life insurance policies pay for more than funeral expenses, which is comforting because the cost of burial and funeral expenses have increased over the last two years. For example, if a 20-year-old has any of these common financial interests, they should consider a life insurance policy:

Car Payments

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.

Student Loans

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.

Income Replacement

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.

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Types of Life Insurance

Life insurance varies in what it covers and the length of coverage time. Learn about the two types of life insurance and what they offer.

Term Life Insurance

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

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.

What Is the Cost of Life Insurance for a 20-Year-Old?

Life insurance costs vary depending on many factors, including:

Age and Gender

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.

Life Insurance Coverage

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.

Insurance Policy Length

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.

Health and Lifestyle

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.

Life Insurance in My 20’s FAQs

Considering a life insurance policy purchase often inspires many questions, especially for younger investors. Check out these common questions asked about life insurance for a 20-year-old.

Permanent policies continue coverage so long as the insurance company receives payment. Term life insurance policies may expire during a client’s lifetime. If a person outlives their term policy, they don’t get money back nor gain access to the funds put into the policy.

Because of this, many people prefer to invest in permanent life insurance policies over term ones. However, for newcomers to life insurance, a term policy offers lower rates than permanent policies. Consider current finances and potential future ones when choosing between the types of life insurance policies.

Choosing the amount for a life insurance policy depends on certain factors, including a person’s current financial situation and potential future investments. Work with a life insurance company to learn more about life insurance payments and coverage options.

Some 20-year-olds may have life insurance coverage through their family or work. However, the coverage may not meet the financial needs that loved ones would face should an unexpected passing occur. Examine current life insurance policies to ensure that they provide enough death benefits, then consider whether purchasing a second one would help.

For some 20-year-olds, purchasing a life insurance policy may make little sense. Some reasons a young person may hold off on purchasing life insurance include the following:

  • Not having a family
  • Not accruing a significant amount of debt
  • Not having a high enough budget for monthly payments

Purchasing life insurance when unable to keep up with the payments makes the investment worthless, so make sure it makes financial sense before choosing a life insurance policy.

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Take Advantage of a Life Insurance Policy Before You Need It

Regardless of age, investing in a life insurance policy provides a safety net for family members and loved ones left behind in case of an unexpected death. Life insurance for a 20-year-old offers many benefits over engaging in a policy later, including lower annual premiums and the option to build up an investment portfolio. Start by learning more about how much a 20-year-old would have to pay for a life insurance policy depending on their specific situation.

Alliance Income Services Corporation provides the ability to compare multiple life insurance premiums from different companies, ensuring the best possible rate. Learn more by filling out our free quote form today.


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