Think you’re too young to buy life insurance? Here are the top five reasons to buy life insurance when you’re in your 20s.
If you’re in your twenties–especially if you’re single and have no children or dependents– you may believe that life insurance is not something you need right away. In fact, more and more people in their twenties are realizing how important it is to buy life insurance at an early age, often as part of their portfolios and as a way to start saving money. The idea of waiting until you’re married and in your thirties may be obsolete. Read about the top five reasons to buy life insurance in your twenties so you can understand when to buy life insurance and figure out which type to buy.
1. Paying a lower premium
If you buy life insurance when you’re young and healthy, you’ll typically enjoy lower premiums than when you buy life insurance at a more advanced age. Some companies might charge a man in his forties almost twice as much as a similarly healthy man in his twenties.
If you contract a chronic health condition when you’re older (before you sign up), your monthly premiums will be significantly higher, and you’ll end up paying much more for life insurance than if you had locked into a lower rate when you were younger and healthier. In this case, you may want to consider a term life insurance policy. A level premium term policy is a costlier type of term insurance, but the premium will remain the same for the entire time period you’re covered. If you prefer a permanent life insurance policy, the whole life option, which offers a fixed premium and guarantees growth of its cash value over time, may work well for you.
2. Supporting others
Many people in their twenties support others, including aging parents. There are millions of unmarried parents in the United States who reside with their children, so this is a more common scenario that you might expect. If you have loved ones who financially rely on you, then it’s extremely important for you to provide a financial safety net for them. An annual renewable term insurance policy could work in this scenario, since it starts out with a lower premium and can be renewed year by year; however, the premium goes up every year.
3. Outstanding loans
You may have a significant student loan debt, or even a home mortgage for which your parents or relatives have cosigned. Should something happen to you, your loved ones could be left struggling with a hefty amount of debt. A level premium term life insurance policy that covers the exact timeframe of your mortgage or student loans could help protect your loved ones from unwanted financial burdens.
4. Leaving a legacy
Maybe you’re passionate about a specific cause– a certain charity, for example. According to Forbes.com, an easy and costless way to leave money to a good cause is to attach a charitable giving rider when you buy a life insurance policy. These riders usually come at no cost; don’t increase the insurance premium; and don’t affect the cash value of the insurance policy. You need to make sure you name a charity that meets the IRS definition of a nonprofit organization as a beneficiary. As with most tax planning matters, you should consult an expert to advise on your specific tax situation.
5. Saving money
When you buy a life insurance policy, you’re also forcing yourself to save money by regularly setting aside a certain amount to pay your policy premiums. You could buy a permanent universal life insurance policy, which lets you decide when to pay your premium and how much you want to pay at a certain time, while also allowing you to change amount of the death benefit. In addition, a universal life insurance policy include a savings element that is invested for you to provide significant cash value. You can also use the interest you accumulate to pay for your premiums.
For more information on the kinds of life insurance mentioned above, see Types of Life Insurance Policies.
Note: This information is just a general summary of factors to consider and may not reflect the provisions of any particular insurance product. Always carefully check the provisions of any insurance product you have or may consider purchasing. To help you understand your insurance options, you can speak to a licensed insurance agent at eHealth.com.
If you’re in your twenties and want to buy life insurance, you can explore your options for permanent or term life insurance plans by entering your zip code in the box on the right side of this page. If you’d like to stay informed about this topic, please feel free to sign up for our newsletter in the lower right side of this page—it’s filled with updates about life, health, and other types of insurance.