Should People in Their 20s Get a Life Insurance Policy?
July 18, 2023
Life insurance is essential to planning for the future, but many people put off purchasing a policy. After all, you don't have to worry about end-of-life planning until you're near the end of your life. Unfortunately, this perspective can leave loved ones in a dire financial situation if you pass away unexpectedly. Understanding and maintaining a life policy in your 20s is one of the most important things you can do to protect your family.
What Does Life Insurance Do?
A life insurance policy pays out a death benefit should you pass away from a natural or accidental death. Policies may also cover suicide, although most companies have stipulations, such as a length of time that must pass between the insurance purchase and the death.
When you purchase the policy, you can designate beneficiaries. These individuals will receive the funds upon your passing. You can change beneficiaries as necessary; the process usually requires paperwork and a signature, which your agent can help with.
What Are the Benefits?
Life insurance coverage can bring you peace of mind, as you'll know your loved ones have the resources to flourish even though you're gone. Funerals are surprisingly expensive, with most people spending at least $7,000. That's a significant amount of cash to lose amid a difficult situation. Life insurance covers funeral costs and more so that your loved ones can focus on celebrating your memory instead of worrying about paying the bills.
A sudden passing can devastate households that rely on two incomes. While a payout may not set up your partner for life, it will provide time to figure things out:
- Moving in with friends or family
- Downsizing to a smaller place
- Moving to an area with a lower cost of living
- Going back to school or changing careers
Partners with children can also take time off work without feeling the financial strain. Doing so allows them to look after their children's emotional needs and claim their own space to grieve.
Why Get Insurance in Your 20s?
Getting a life insurance policy at a young age offers more opportunities down the line, especially when it comes to retirement. Life policies have tax benefits, allowing you to leverage them as savings and even loan collateral. Additionally, many policies provide an option to borrow against the benefit, which can be a significant relief if you or a partner require hospitalization or long-term care.
Finally, getting insurance in your 20s is just plain cheaper than waiting. Younger individuals are less likely to have health issues, which means lower risk to the insurance company and a smaller premium for you.
What Should You Consider When Buying Life Insurance?
There are several types of life policies, with some lasting your whole life and some ending after a set amount of time. Figuring out which is right for you depends on the following:
- Your current financial situation
- Whether you own property
- Whether you have a partner and children
Finding the right life insurance takes time, as you'll need to determine how much coverage you need, what monthly payment you can afford, and whether you want access to the funds during your lifetime. Reach out to us at 1891 Financial Life for help navigating the process and discovering a solution that works for you at any age.
About 1891 Financial Life
At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs. In 2023, 1891 Financial Life was listed by Forbes as one of "The World's Best Life Insurance Companies."
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.