I’m In My 20s or 30s. Do I Need Life Insurance?

When should you get life insurance? If you’re young, you may not have ever considered buying life insurance. You’ve got more immediate expenses to deal with, and life insurance seems like something middle-aged people need to worry about. Not so, according to experts, who advise that it’s never too early to be insured. 

Pro tip: If you wait until you’re older to look into life insurance, you’ll wind up paying significantly more for coverage. You’ll also lose out on the peace of mind potential that comes with responsible financial planning. Want to learn more about this often-overlooked step to getting all your ducks in a row? We’ve got you covered.

Learn more about the top life insurance companies

Policy Types

Life insurance falls into one of these two categories: term life insurance and whole life insurance. Younger buyers often opt for term life insurance because it affords them the most coverage for the least money. 

Term life insurance is inexpensive, especially for people who are young and healthy. This type of policy covers you for a set period or term at a fixed monthly rate. Once the term expires, the policy terminates unless it’s renewed. 

Whole life insurance gives you coverage for the rest of your life, provided you pay the premiums. Whole life policies also have a tax-deferred cash value that accumulates each year. While more expensive, a whole life insurance policy lets you retain the protection you’ve paid for without expiring. 

Talk to a financial planner to learn what type of policy makes sense for you. Generally, people are advised to take out life insurance worth five to ten times their income. You can expect your life insurance premiums to rise around 10% for each year you put off purchasing a policy, so the younger you buy, the cheaper your policy will be. Check out the prices for these top Insurance policies for young people.

Compare Life Insurance Providers

Ladder

Ladder offers term life insurance online issued by Allianz Life Insurance Company of New York in New York and Allianz Life Insurance Company of North America in all other states and DC. U.S. residents aged 20 to 60 can apply for coverage online and get an instant decision. Ladder’s policies are designed to allow users to move their coverage amount up and down by applying online for more coverage or decreasing coverage with a few clicks. Read the full review.

Ladder View Rates

Ethos

Ethos  offers a simple way to buy life insurance directly without the hassle of going through salespeople or agents. They partner with top-rated carriers and use proprietary software to create a 100% online, ten-minute application to match you with the right policy. They provide a wide range of whole and term life insurance policies, and more importantly, they don’t require any medical exams. Their website is comprehensive, clear, and easy to navigate, and their team of agents are there to help customers navigate any challenges. Read the full review.

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Legal & General

Legal & General offers term and whole life insurance with no medical exam required. For term life insurance, Legal & General America offers policies of 10 years to 40 years (and many in between), at competitively low costs compared to the industry standard. For example, a 20-year-old female non-smoker in excellent health purchasing a 10-year term life insurance policy with a $100,000 face value would pay as little as $8 monthly premium. A 45-year male non-smoker with average health, purchasing a 20-year policy with $1 million face value, might pay between $137 to $159 per month. Read the full review.

Legal & General America View Rates

Do I Need Life Insurance?

A financial safety net 

The primary reason to buy life insurance is to protect your spouse or children financially if the worst happens. If your loved ones rely on your income, life insurance can help support them if you pass away. Consider the expenses they will face beyond the day-to-day, such as mortgage payments and education costs, and purchase a policy that can cover these expenses. 

But there are other reasons for buying life insurance young aside from the death benefit. If you have student loans, you may think your debts will be cancelled in the event of your passing. This is not always the case. While federal student loans can be cancelled in case of death, many student loans are private and don’t offer a death discharge clause. While it can be grim to think about, nobody wants to saddle their spouse, children, siblings, or parents with outstanding student loan debt after they’re gone. 

The same idea applies to other debt such as a mortgage, business loan, car loan, or credit card debt. Life insurance can prevent your loved ones’ emotional burden from being compounded by a steep financial burden. 

Check prices for term life insurance now

Great rates for the young 

When you’re young and in good health, you can qualify for excellent rates on term life insurance. These attractive rates get locked in for the duration of your policy. Waiting until you’re older, on the other hand, makes it more likely that health screenings you must do before getting insurance will find issues like high blood pressure or high cholesterol, which can lead to your premium costs being much higher. Read more about the advantages of getting life insurance online, without taking a medical exam.

Build credit with a whole life policy 

Even if you don’t have dependents, life insurance is a smart choice. Because whole life insurance lets you accumulate cash value, it’s wise to start early. The longer you have a policy, the more time it has to grow. By setting up whole life insurance at a young age, you’re making an investment that will only compound over time.

Compare whole life insurance providers

Qualify for discounts 

In some cases, having a life insurance policy earns you a discount on other insurance costs, such as home or car insurance. Multi-policy discounts give you a full range of coverage and save you some money at the same time. Buying life insurance shows companies that you’re financially responsible. Feel free to pat yourself on the back! 

The best life insurance for young people in 2021 

Now you know the benefits of buying life insurance in your 20s or 30s. Let’s look at the top companies we recommend for life insurance policies for young buyers.

How Much Coverage Do I Need?

It can be daunting to figure this out but evaluate your current financial situation today, and what foreseeable expenses will need to be covered 10 to 20 years down the road. 

When deciding how much coverage to purchase, ask yourself these questions:

• How long do I need coverage? If you just got married and are starting a family, you will need at least 20 years of coverage to ensure that your children are provided for until graduation.
• How much can I afford? Find the balance between buying enough coverage and having a monthly premium that fits in your budget. The more coverage you purchase, the more expensive your premium (the amount you pay) will be.
• What will my family need if I pass away today? If something were to happen to you today, there would be a lot of financial expenses placed on your family's shoulders. 

Whether you choose term or whole life insurance depends on your current and future financial needs. Either one is essential to have, especially if you have loved ones who rely on you for financial stability. 

How to Apply for Life Insurance

The process of applying for life insurance always begins with determining the amount of coverage and monthly rate that is approved for each customer. For some providers, such as Bestow, this is done via an easy quoting tool, which takes some basic customer information and runs it through an automated calculator before listing a price and a way to apply for coverage. With other providers, receiving a quote may not be quite as straightforward as quotes are only available via speaking with a representative. The application processes vary widely between providers. 

After the online tool, the agent or representative uses the financial, medical and other personal information provided to determine an appropriate amount of coverage. You'll then need to undergo a medical exam, unless the provider offers an exemption, and it must be performed within a certain period after applying. 

Companies such as Ethos and Ladder offer instant coverage through an online application, exempting many from the medical exam that is often necessary before receiving approval. This allows those who need a quick coverage solution to resolve the matter within a couple days rather than the weeks it takes with some providers. Regardless, once approval is finalized, policy coverage begins immediately alongside monthly premium payments.

Bottom Line

If you’re a millennial or a member of Gen Z, you may not have given life insurance much thought. But getting life insurance in your 20s or 30s makes sense. Life insurance protects your loved ones in case of tragedy and keeps your outstanding debts from becoming a burden to others. Buying a policy while you’re young and healthy saves you a lot of money and amasses cash value in the case of a permanent policy. 

Next time you’re at a family get-together and life insurance policies come up, you won’t simply be rolling your eyes and waiting for dessert. The peace of mind you’ll get from having life insurance is as priceless as the look on Aunt Trudy’s face when you casually mention your policy. While not the most exciting purchase you’ll ever make, a life insurance policy may be the smartest.

Disclaimer

*AM Best Rating: A.M. Best's Financial Strength Rating (FSR) is a measure of an insurer's financial strength and ability to pay out claims to policyholders. An "A" rating with A.M. Best indicates that an insurer is considered to be top of the industry in ability to meet ongoing insurance obligations.

Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers – for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products. Coverage amounts vary by state.