You may think you don’t need life insurance because of your current life situation. Perhaps you’re young, single and healthy. Maybe you don’t have much debt. Whatever your thinking is, Millennials and Gen Z should purchase life insurance — and the sooner, the better.
Should You Get Life Insurance in Your 20s?
One of the most common life insurance myths is that only certain populations — namely, people with a lot of potential debt (like a mortgage) and/or those with children to care for need life insurance. However, life insurance is actually the ultimate protection and a useful financial tool, even if you don’t have a mortgage or family. You don’t want to think about having to use life insurance when you’re young, but there are plenty of reasons for Gen Z and Millennials to buy insurance now.
Reasons to Buy Life Insurance Young
1. Lock in Affordable Premiums
One of the biggest reasons to consider purchasing life insurance when you’re young is that your insurance costs are lower. Age and health are two major factors that affect life insurance premiums; when you’re young, you’re generally healthier and a long way off from needing to utilize your policy. That means your premiums are low, and you can lock those rates in for the lifetime of your policy. Your older self will thank you when you’re still paying the rates of a healthy 22-year-old when you’re 50!
2. Cover Your Debts
While you may not have large, locked-in expenses, such as a mortgage, there are a variety of other things that life insurance can cover, such as funeral costs (which average $7,360). Life insurance can also help with any outstanding student loan debt, car payments, or credit card debt. Overall, its peace of mind knowing that should your family have to deal with the worst, they won’t have an additional financial burden.
3. Build Your Wealth
Life insurance can serve other uses besides paying out a death benefit. Some types of policies can actually help you accumulate money; after paying into a policy for a while, you can cash out whole life insurance for a lump sum if you no longer need the protection life insurance offers. Another option is return of premium life insurance, which insures you for a set time period then returns the premiums at the end of the term.1 Indexed Universal Life policies earn interest based on market performance, so they can accumulate value quickly that you can then use through planned loans2 and withdrawals3.
4. Protect Yourself Despite Job Loss
Many employers offer life insurance as an employer benefit; although those are good policies to have access to, you’ll want to purchase your own policy. If you decide to leave your company or lose your job, you’d likely lose that coverage. A worst-case scenario is that you opt for just your employer-provided life insurance when you enter the workforce then work somewhere for 20 years before leaving and all-of-a-sudden you’re without life insurance during a time when you really need it and are facing higher premiums.
5. Secure Your Future
Of course, the main reason people purchase life insurance is to protect their loved ones. While you may not need it now, it’s never too early to start planning ahead and make a plan to protect your future family.
What Type of Life Insurance Should Young Adults Buy?
Not all types of life insurance policies are equally beneficial for everyone. Young adults may have an even harder time choosing a policy if they want their life insurance to serve a variety of purposes. Talk to a Farm Bureau agent about your goals for life insurance; they can help you find options that fit your life now and into the future.