You may be tempted to get by with the bare-bones coverage offered by your employer, but the COVID-19 pandemic has brought life insurance coverage to the forefront of our minds.
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.
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.
| Insurance provider | Medical exam needed? | Lowest price/mo. |
|---|---|---|
| Ladder | ✗ | $15 |
| Ethos | ✗ | $10 |
| Bestow | ✗ | $10 |
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.
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.
Ladder
Ladder attempts to streamline the life insurance purchasing process, making it appealing to young people. For up to $3M policies, you can apply quickly and no medical exam is needed. More extensive policies are available, up to $8M. Ladder is available in all 50 states and Washington, D.C. Applicants may be between 20 and 60. There are five term options for Ladder’s life insurance. Whole life insurance is not available.
If you want to change your coverage or decrease your policy size, Ladder lets you take care of it instantly online, compared to some other carriers who may make you cancel your policy and apply for a new one. This is a nice feature for young customers who wish to add coverage once they get married, buy a home, or have children. Ladder’s web portal lets you view and manage all aspects of your life insurance policy in one convenient place.
Ethos
Another good choice for young buyers, Ethos gives you inexpensive term life insurance without undergoing a medical exam. You can be approved on the website within minutes and even get covered the same day, so there’s minimal hassle to get it set up. You can qualify for a death benefit between $50,000 and $2M, with term length options from 10 to 30 years. People aged 20 to 85 can apply for Ethos life insurance.
Ethos is not your typical life insurance policy provider; it's cut out the tedious steps usually involved in the process and put everything into a quick and easy online application form. Their website is comprehensive, clear, and easy to navigate, and their team of agents are there to help customers navigate any challenges and find the right policy for them, making it a great choice for younger buyers who want hassle free, reliable life insurance.
Bestow
Bestow is another insurer that seeks to close the gap between how many Americans want life insurance and how many have it. Bestow offers term life insurance coverage to people aged 18 to 60 in all states besides New York. The application can be completed entirely online, even through a mobile device. North American Company issues Bestow life insurance policies. Bestow plans range from $50,000 to $1.5M, and several term options are available, ranging from 10 to 30 years.
Bestow requires no medical exam and relies on the health and lifestyle information you share during the digital application process. You’ll get a quote in just minutes, and rates can cost as little as $10 a month (though customizations like term length and coverage amount mean you’ll likely pay more). Bestow offers a 30-day money-back guarantee, unlike many of its competitors. You can cancel within a month of purchasing the policy for any reason and get a refund.
Summary
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.
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