"Should I get life insurance in my 20s?" is a question many young adults ask themselves. You might think that life insurance is something you only need when you age. But the truth is that you could benefit from coverage when you're young and healthy.
While nobody wants to consider the possibility of their untimely demise in their 20s or 30s, thinking about life insurance early is smart.
This article will walk you through why life insurance coverage matters, how much it generally costs, and why you should consider it sooner rather than later. And if you’re already shopping for coverage, check out our best term life insurance companies to compare options.
Key Insights
- Life insurance is an important safeguard, no matter your age.
- Premiums tend to be much lower if you buy a policy earlier in life, as young adults tend to have fewer health issues.
- Temporary and permanent life insurance policies exist, with term coverage being the cheapest option in most cases.
Why Life Insurance Matters for People in Their 20s and 30s
Life insurance matters for several reasons if you’re in your 20s or 30s. Here are a few of the big ones:
- Financial safeguard for your spouse, children, or aging parents. A life insurance policy can help pay for your funeral, and pay off your student loans, mortgage, and credit card debt if you die.
- Lower premiums at a young age. One of the biggest perks of getting life insurance while you’re young and healthy is the low premiums. If you wait until you’re older, your premiums will likely be much higher.
- Workplace coverage isn’t sufficient. Many employers provide basic life insurance coverage, but this coverage often isn’t sufficient. Consider your total debts and how those costs compare to the workplace coverage that may be available to you.
Who Should Consider Buying Life Insurance in Their 20s or 30s?
Several types of people could benefit from life insurance in their 20s and 30s, not just those with student loan debt or a new mortgage. You might consider a policy if you’re a:
- Young professional with outstanding debt
- Newly married or a young parent
- Person who relied on a co-signer for your student loans
- Entrepreneur or business owner with professional financial obligations
Types of Life Insurance to Consider
Several types of life insurance exist, though term life insurance is usually sufficient for most people. Here’s what to know about each type.
Term Life Insurance
Term life insurance is usually in place for up to 30 years—provided you keep up with premiums—and it’s typically the cheapest option if you want coverage. Many term life insurance companies let you get coverage without a medical exam, though some require you to have one.
Whole Life Insurance
Whole life insurance provides permanent coverage that lasts your entire life, unlike policies that expire after a set term. It offers two key features: a guaranteed death benefit and a cash value component that grows over time.
While this combination of lifelong protection and built-in savings makes it attractive, it typically comes with significantly higher premiums than other types of coverage.
Universal Life Insurance
Universal life insurance is another type of permanent coverage. It also tends to have high premiums, though it generally offers more flexibility than whole life insurance. Many universal life insurance policies let you adjust your monthly premiums and death benefits, providing valuable flexibility if your life situation changes.
Group Life Insurance
Group term life insurance is employer—or group-sponsored coverage that can give employees a valuable safety net. While it’s beneficial for eligible participants, not all employers offer this coverage, and it’s typically not transferable if you change jobs.
How Much Life Insurance Do You Need?
To establish how much life insurance you need, experts recommend buying a life insurance policy that’s 10-15x your annual income. Of course, you’ll want to consider your individual situation before you get coverage. Assess your financial responsibilities first, including the following:
- Your income
- Current debts (student loans, credit cards, mortgage)
- Future expenses (children’s education, spouse’s financial stability)
Additionally, a life insurance calculator can help you estimate your coverage needs before you shop for a policy.
Cost of Life Insurance for Young Adults
Young adults often have an advantage when buying life insurance: They tend to have fewer health issues than older adults, which usually means cheaper premiums.
Of course, life insurance companies will also consider broader issues like your lifestyle choices and habits. For instance, if you’re a smoker, you may end up with higher premiums than a non-smoker.
Life insurance coverage is generally the cheapest for young adults with no serious health issues or high-risk habits. Let’s assume a 25-year-old and a 35-year-old are interested in separate $1 million 20-year term life insurance policies.
Both have an average body mass index, are in excellent health, have great credit, and don’t use nicotine products. Here’s an estimate of what coverage might cost for each person:
- 25-year-old: $24-$52 per month
- 35-year-old: $36-$62 per month
When You Might Not Need Life Insurance Yet
Not every young adult needs life insurance right away. If you're single with no dependents and minimal debt, you might choose to wait or opt for a small policy that covers basic end-of-life expenses. You might also postpone purchasing coverage if you have:
- Substantial savings or assets that could cover any financial obligations
- Adequate life insurance through your employer that meets your current needs
- No one who depends on your income or would inherit your debts
How to Buy Life Insurance in Your 20s or 30s
If you’ve decided to buy life insurance, the process is pretty simple—especially if you’re buying term coverage. Here are some steps to take:
- Talk to your financial advisor: Before you shop for coverage, consider speaking with a financial advisor for advice on which type of life insurance best suits your situation.
- Get quotes: Get online quotes and note the estimated costs of different coverage options. Consider no-exam life insurance for a faster and easier process.
- Choose a policy: Once you’ve compared options, choose a policy that best meets your needs and budget. You’ll need to pick a coverage type, term, and designate a beneficiary.
- Review and update your policy over time: Your life situation will likely change in the future, so it's essential to review your policy periodically and update it as needed.
Common Myths About Life Insurance for Young Adults
Life insurance can be beneficial for people in their 20s and 30s, but some common myths persist about this important protection. Myths include:
- “I don’t need it because I’m single:” This isn’t necessarily true, especially if you have existing debt.
- “It’s too expensive:” Term life insurance tends to be fairly affordable, with some policies costing around $20 per month.
- “I can always buy it later:” While you could get coverage later, it might be much more expensive.
- “My employer’s policy is enough:” If you have a small policy through your employer, it might not be enough, especially if you have a mortgage and student loan debt.
Conclusion
Life insurance can be a valuable safeguard, no matter your age, even if you’re in your 20s or 30s. Term life insurance tends to be the best and cheapest option for most people, though you may be more comfortable with permanent coverage—it depends on your needs and preferences.
Consider your situation, explore your options, and buy life insurance at a young age to help protect your family’s finances for years to come.
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