Age is just a number … right? When it comes to buying a life insurance policy, age can play to your advantage in a big way.
Life insurance financially protects your loved ones if you die. When you’re young, buying life insurance may not be at the top of your to-do list. Or you may think you don’t need it. But there are many benefits to life insurance — regardless of whether you have a family that relies on your income or you’re single. And there’s an added benefit to purchasing life insurance as a young adult: Generally, life insurance is less expensive if purchased when you’re younger and healthier. It could even cost less than your daily latte.
The best life insurance policy for young adults varies based on your life insurance goals. Let’s take a closer look at two popular life insurance coverage options to help you decide which option is best for you. Here’s what you need to know about term life and whole life insurance for young adults.
Term Life Insurance for Young Adults
A simple way to think about term life insurance is to view it as a temporary coverage option. With this type of coverage, your premiums remain fixed for the term (a set number of years).
A term life insurance policy is typically a good option for young adults under 30 because the premium is generally lower compared to whole life insurance. When you’re young and starting your career, you may not have a lot of extra income. Term life insurance is an affordable way for young adults to get the protection they need for a set number of years.
Term life insurance is also a good option for young families because it can offer protection for your children as they grow up, giving you peace of mind. The death benefit can be used to help replace your income for your family, pay off your mortgage and send your children to college.
There are a few different kinds of term policies to choose from. In addition to level term, there is also Return of Premium Term that will return a portion of your premiums at the end of the term. If you like getting cash back on purchases, then this may be a good choice for you. And, with our Increasing Term product, you have the flexibility to increase the face value of your policy as your needs grow. Additionally, you can generally opt to convert your term policy to whole life insurance, giving you coverage for life.
Whole Life Insurance for Young Adults
A whole life insurance policy is a permanent coverage option that guarantees you’ll have coverage for life. Whole life insurance premiums are generally higher than term life insurance premiums, but because your coverage is guaranteed for life, you won’t have to worry about the premiums increasing as you grow older. Whole life insurance is a good option for young adults to consider as their salary increases and they’re looking for a permanent coverage option.
As you pay your premiums on your whole life policy, it will accumulate a cash value. This cash value grows on a tax-deferred basis, which can allow your funds to grow faster. As you get older, you’ll have options to cash in your whole life insurance policy. Depending on the type of policy, you may be able to borrow against the cash value for future financial needs like starting a business, buying a home or supplementing your retirement income.¹
Preparing for the Future
Whether you’re married, have children or are just starting out — life insurance is a smart move. Our Farm Bureau agents make insurance simple so you can tackle life’s adventures with peace of mind. Talk to your local Farm Bureau agent for help choosing the right life insurance policy for you.
¹Withdrawals may be subject to fees and/or considered a taxable event. Any loans from the policy’s accumulated value will reduce the accumulated value and death benefit if the borrowed funds, plus interest, are not repaid by the time of your death.