Young, Single, and Childless? Why You Still Need Life Insurance

So, you’re officially embarking on the next chapter of your life. You’re fresh out of college, just started a new job, and are on the hunt for your first home. Congratulations, you’ve officially entered adulthood. Your twenties are a special time and you should enjoy every moment to its fullest. But, that doesn’t mean you shouldn’t make some “adult decisions” during this period. And purchasing life insurance should be one of those decisions.

Traditionally, people don’t start thinking about life insurance until they get married or welcome a baby into the world. What could you possibly need life insurance for before that? Who would you be protecting before that? Well, there are still a number of great reasons to consider purchasing life insurance above and beyond what your employer offers. Let’s look at a few reasons why your twenties or early thirties is a smart time to purchase.

Younger = Lower Premiums

The insurance company’s revenue is determined by the amount of premiums collected, minus the death benefits paid out for that specific risk group. Another words, every year that the insureds don’t die, their revenue goes up. The life insurance underwriter’s job is to identify the likelihood of an early payout for each applicant and the premium is adjusted accordingly. The risk of them paying out when you’re young is significantly lower. As a rule, that decreased risk is transferred to you through lower premiums.

Good Health = Lower Premiums

The other primary factor in determining your premium is your health. While it’s possible for any one of us to die at any time, you’re statistically less likely to meet an early death if you’re young and healthy. As each birthday passes, the risk of you developing a health condition rises. Once you reach your 30s, the chance of you developing a chronic condition like heart disease or high cholesterol rises considerably. So, for most consumers, the ideal time to purchase life insurance is in your twenties. Your health, coupled with your age, equates to the best possible premium.

Insurability Later in Life

A permanent life policy is recommended over a term policy, as this is a great opportunity to build a little nest egg through the cash value on your policy. Depending upon your financial situation, however, this might not be an affordable option for you. If you decide a term policy is best for your budget, don’t fret; you’re setting yourself up for a later date.

Most term life insurance policies include a term conversion rider standard on every policy. This rider allows you to convert your term policy into a permanent life policy without submitting to another medical exam. While your converted policy premium will reflect your age and overall health, this rider comes in handy for people who have developed medical conditions since the original policy’s inception. It makes the entire process smoother and more affordable.

While this rider comes standard on most policies, some companies require the benefit to be requested on the application. Be sure to check with your agent to ensure you don’t miss out on this valuable opportunity.

Living Benefits

Most people equate life insurance to death. And rightfully so. That is it’s intended purpose, right? While this is true, many people use their life insurance for living benefits as well.

Your whole life policy has the added benefit of accumulating cash value. This builds slowly at first, as there are policy set-up fees that must be paid down at its initially. But as time goes on, you’ll start to see the cash value really grow. This is your money that can be borrowed against at any time, for any reason. Many insureds use this money to help pay off student loans, offset the costs of their wedding, or even supplement their income when they get to retirement age.

When purchasing your policy, be sure to speak with your life insurance agent about the Acceleration of Death Benefit Rider. Should you become terminally ill, this rider allows you to collect on your death benefit early. This can help ease the pain of paying for medical bills or provide you with the funds to check some things off your bucket list before your death. It’s a living benefit none of us envision ourselves ever needing, but are grateful for if and when the time comes.

Your twenties are a time to celebrate. You’re officially out on your own, enjoying the wonderful gifts that life has to offer. It’s also a time to start considering financial priorities and setting yourself up for long-term success. The best time to purchase life insurance is when you’re young and healthy. If you invest in your future now, it’s one less thing you have to think about later, when you’re celebrating the growth of your family or a new home purchase. So don’t delay; speak with an insurance professional about your options today.