Those within the 20 to 29 age group often overlook the importance of term life insurance coverage.
But that’s a pretty crucial mistake.
Although you might be young and healthy now, you’re not too young for life insurance.
Find out everything you need to know about term insurance as a 20 to 29 year old below.
Term Life In Your 20’s Is Simply Preparing for the Future
When you’re in your twenties, the future is full of hopes and dreams.
In fact, you might spend most of your time thinking about the future. It’s the perfect time to prepare yourself for the future financially.
On your list of financial obligations, you might have a wedding, a family, and a business.
But creating a budget isn’t the only way to prepare for those major life events. You can prepare by setting up your term insurance policy.
There are a few ways in which term life insurance can help you prepare yourself for the future.
Table of Contents
Getting Life Insurance at a Great Rate
When you’re young, life insurance is inexpensive. While older individuals face high premiums, young individuals often have low premiums.
Individuals in their twenties often have better health, for example.
As a result, they are more likely to qualify for better ratings.
Before premiums skyrocket, you can take advantage of the low rates.
Waiting until your older means more money out of your pocket.
Rather than waiting, you can get a great rate and all the benefits that come with life insurance.
Making Room in Your Budget
If you’re young, then it’s likelier you have a tight budget. A regular life insurance policy might seem out of your budget.
However, that’s not necessarily the case.
There are very, very affordable life insurance policies available as someone in their twenties.
When you’re in the 20 to 29 year old age bracket, you can expect to pay very low premiums. You only need to have a little extra money in your budget to cover the cost.
Just remember: It’s worth making room in your budget for life insurance. In the end, your small investment can pay off greatly. You never know what life will throw at you – life insurance prepares you for the worst.
Is Life Insurance a Necessity?
Technically, you don’t NEED life insurance.
However, it does belong on your list of priorities. You might be young, but life insurance is something you should consider. You’re never too young to get life insurance.
Individuals in their 20’s see death as an unlikely event. While they know the day will come, they don’t see it in their future. Therefore, life insurance seems unnecessary.
But, life insurance isn’t about death.
Instead, it’s more about planning for the future. Your 20’s is about planning for your future family. Whether you’re single or committed, you may one day have a family.
Your insurance policy is a way for you to financially prepare your family for a day when you are no longer around.
If something bad happens to you, the policy gives them a safety net.
Getting term insurance when you’re young secures their future.
The Benefits of Term Insurance for 20 to 29-Year-Olds
There are many benefits to getting term insurance at a young age. If you’re considering insurance, then you should think about how it can help you.
Let’s run through these.
1. Plan for Your Future, Regardless of What It Holds
Once you hit your 20’s, life starts changing.
As an adult, you can expect to experience many different circumstances. The next few decades hold many very drastic changes for you.
Term life insurance prepares you for those changes. It doesn’t matter what your future holds.
With life insurance, you can be ready for all of life’s major changes.
2. Prepare for Marriage
Many couples marry in their 20’s or 30’s.
With marriage comes financial obligations.
For example, many couples take on debt. There are mortgages, student loans, and car payments to deal with.
If something happened to you after your marriage, then your partner would be responsible for all that debt.
Without life insurance, the debt could bury them.
In addition to dealing with your death, your partner would be dealing with crippling debt.
3. Get Ready for Kids
When you have children, your whole life changes.
They rely on you for everything.
If you passed away, then they would lose all of their financial support.
Life insurance could provide for your children long after you are gone.
4. Protect Parents from Student Loans
Many students get through college with student loans.
Often, parents cosign for those loans. By cosigning, they take some responsibility for your debt.
If you passed away, then your parents would need to pay off your student loans. You could lighten the load for them by getting life insurance.
5. Cover Your Business Obligations
If you own a business or plan on owning a business, then life insurance is important.
An unexpected event could cause your demise. After your death, someone needs to cover your business debt.
With life insurance, you can cover those obligations.
What Is the Real Cost of Life Insurance?
Life insurance comes at a cost, of course.
Fortunately, term life insurance comes at a very low cost. It’s the most inexpensive type of life insurance policy.
If you’re between the ages of 20 and 29, then term life insurance can be within your budget. You won’t need to bend over backward to make your payments.
Over time, the cost of life insurance goes up, however.
The older you get, the higher the prices rise.
If you wait too long to get term life insurance, then it might be out of your budget.
How Do They Calculate the Cost?
The underwriters for life insurance companies consider several factors when they calculate the cost of a policy.
One of the biggest factors is your age.
As you age, you get closer to a natural death. This puts the insurer at a bigger risk for paying out the policy.
Therefore, they charge lower rates for young policyholders.
If you’re 20 years old and get a 30-year term policy, then the underwriter assumes you will survive until your policy expires.
For that reason, they can charge you a low rate.
They don’t see you as a risk.
Waiting to Get a Policy
If you wait ten years to get a term life insurance policy, then your rates will go up.
If you’re 35 and get a 30-year term policy, then you are a risk to the insurer.
There is a good possibility that you could pass away before you turn 65.
While you could live past your 60’s, the insurance company doesn’t know that. They see you as a risk.
As a result, you can expect to pay higher premiums.
Other Factors That Impact the Cost
When an underwriter looks at your application, he gives you a rating.
When you are young and healthy, you are likely to have a higher rating.
As you age, you are more likely to have health issues which bring higher premiums.
It’s worth noting the rating doesn’t only include your age and current health. There are several other factors that impact the cost of your term life insurance.
Here are a few of the most important factors:
Specifically, smoking can cause you to have higher rates. Smoking makes it more likely that you will die at a young age.
Therefore, your premium goes up.
2. Overall Health
Another factor which affects your premiums is your health.
An individual with high cholesterol has a greater risk of health issues than someone with low cholesterol.
As a result, someone with high cholesterol would have higher premiums.
3. Pre-existing Medical Conditions
When you have a pre-existing medical condition, your premiums rise, too.
Usually speaking of condition much worse than high cholesterol or high blood pressure, these are conditions which are incurable or even un-treatable, and may result in a lower life expectancy.
For this reason, the underwriters have to charge more for it to make sense.
4. Coverage Amount
The coverage of your term insurance policy also affects the cost.
If you want a policy with $1 million in coverage, then your monthly premium would be higher than a policy with a $500,000 premium.
This one is pretty basic; buy more, pay more.
5. Family History
The history of your family can directly impact your insurance rates.
It might not seem fair, but some insurance companies charge more for people with a risky family history.
Sample Rates In Your Twenties
Monthly premiums above are for a very healthy applicant, who uses no tobacco products. Rates effective 9/22/2018.
Monthly premiums above are for a very healthy applicant, who uses no tobacco products. Rates effective 9/22/2018.
Monthly premiums above are for a very healthy applicant, who uses no tobacco products. Rates effective 9/22/2018.
Why Choose Term Insurance?
It is true that term insurance is the most affordable type of life insurance.
However, that’s not the only reason you should consider term insurance.
Term insurance is a great option for someone in their 20’s who has a family.
If you have kids when you’re 23, then they will need you the most in the next couple of decades.
Term life insurance protects them when it matters, and ends when it doesn’t.
By the time your insurance term expires, they should be out of your house.
Term insurance for 20 to 29-year-olds protects families. It keeps your children and your partner out of debt and in good hands.
If something happens to you, then they have the financial means to go on.
Getting Insurance While You’re Healthy
Your future can be very promising.
However, it’s not all good. Your future can also hold some unexpected events that could cause your insurance premiums to skyrocket.
For example, you could get into an accident that leaves you with a medical condition.
When you apply for life insurance, that condition could raise your premiums.
As you age, you’re also more likely to become sick. Cancer, diabetes, and other illnesses could be in your future.
If you get term life insurance before you become ill, then you could have low premiums.
Once you lock in your rate, regardless of what happens to you, it can never change as long as you make your premiums on time.
Instead of waiting to apply for life insurance when you’re unhealthy, you can apply for it when you’re healthy.
The difference in the cost can be astronomical.
It could be the difference between affordable insurance and something far out of your budget.
Doing the Math
Choosing the right life insurance policy isn’t easy. It’s a bit of a balancing act.
You need to decide how much coverage you want and how much you can afford in monthly premiums.
If your coverage is too little, then the life insurance won’t do you any good. Your family will be left with debt. All of your monthly payments would be for nothing.
On the other hand, a policy that has too high of a payout could hurt you. By paying high monthly premiums, you’re paying extra every single month. The cost of the payments might not be worth the trouble.
Neither scenario is a good one.
Therefore, you need to consider your policy carefully before you agree on the terms.
Making the Right Decision
To make the right decision regarding your life insurance policy, you need to be honest with yourself. Consider your future and what your needs might be. Try to be realistic with yourself.
One of the most important factors to consider is your income.
Can you afford the monthly premiums?
If the payments are too high, then you will struggle to make them. Your quality of life could suffer.
You should also consider your family’s needs.
More importantly, consider your future family’s needs.
How much money will they need to cover your debt and the loss of your income? Do the math and choose your policy wisely.
The right policy selection can be a recipe for your family’s successful future.
Whether or not something happens to you, you and your family will have peace of mind.
Getting Help Along the Way
If you’re serious about term insurance for 20 to 29 year-olds, then you should speak to an expert.
The only way for you to get an accurate estimate of your cost is to work with a professional.
You can guess all you want, but you don’t have the experience of an underwriter.
If you want to know how much your policy will cost, then you need to go to the source. Get a quote from a professional.
Understanding Employer Life Insurance
Some people hesitate to get term life insurance because their employers offer life insurance.
In fact, some people accept jobs because they offer life insurance.
Although life insurance through your employer might sound convincing, you should evaluate your offer.
In some cases, the employer requires you to pay for the policy out of your paycheck.
Unfortunately, this isn’t always the best option. The coverage could be limited, or you could face high premiums.
If your employer offers you insurance at a cost, then do some research. You might be better off with an independent insurance agent.
If you are in your 20’s, then term insurance with an outside party could be more affordable.
What Happens If You Quit Your New Job?
When you’re young, the future holds many opportunities. You might only keep one job for a year before finding a better offer.
You might even choose a different career field.
If you get life insurance with your current employer, then your policy is at risk.
Quitting, retiring, or getting fired would bring an end to your life insurance policy.
These days, the employee retention rate isn’t great. Individuals between the ages of 25 and 34 have a median job tenure of three years.
Once you lose your policy, you have nothing. You need to start from scratch and apply for a new policy.
However, your (now older) age could make the policy more expensive.
Consider this scenario…
After eight years of hard work, you quit your job. At the young at of 32, there are better job offers out there. But your new position doesn’t offer life insurance.
When you apply for a term policy through an independent agent, you get back a surprising offer. The policy is much more expensive than you thought.
Your age is the reason for the high premiums.
Had you applied for a term life insurance in your 20’s, the rates would be lower.
By accepting your employer’s life insurance, you cost yourself hard-earned money every month.
The Benefit of Private Insurance
When you have private insurance, you don’t need to worry about losing your job or quitting. You can take advantage of new opportunities while maintaining your life insurance.
Private insurance follows you.
As you grow and develop in your career, you can take new jobs as you want them. Your employer’s life insurance policy (or lack thereof) won’t hold you back.
Additionally, the policy is likely to be more affordable.
Rather than lose a significant amount of your paycheck to insurance, you can pay a little out of pocket and keep more money in your wallet.
It’s a win-win situation.
Of course, everything changes if your employee life insurance policy is free. A free policy is too good to pass up.
However, it is rare.
It also can leave you with too little coverage. You should consider the amount of coverage provided by the policy.
Accommodating Your Changing Lifestyle
One of the best things about your 20’s is the ability to change.
Anything can happen.
After you graduate from college or start a career, the possibilities are endless.
At first, your only goals might be career-related. After all, you only need to care for yourself.
But that can all change.
In only a short time, you could find yourself with different goals. Your career goals might remain the same.
However, there could be one major difference. You could have a partner or a child who depends on you.
All of this can happen quickly. You never know when you will meet someone.
When you do, your priorities change. You stop thinking about yourself, and you start thinking about others.
At this point, life insurance becomes important.
Saving for a Future
All too quickly the future becomes more about saving money for a night on the town to saving money for a wedding or for your child’s education.
Your plans for the future could change dramatically.
As those plans change, your financial obligations change.
If you passed away, someone would be responsible for those obligations. That’s where life insurance comes into play.
Life insurance helps you save for a future.
By paying your monthly premiums, you’re putting aside money for a day when you are no longer around. It prepares them for the worst, in a financial way.
Thinking About the Unthinkable
No one wants to acknowledge the fact that death is imminent.
Unfortunately, it happens to everyone at one time or another.
When you’re in your 20’s, you might not want to consider the fact that you could go at any moment. The chances seem slim, and it’s a morbid thought.
Unfortunately, everyone should think about the unimaginable event of an untimely death.
Once you realize that it is a possibility, you can plan for the future. You can start looking into term life insurance.
What Would Happen to Your Family?
If the unthinkable occurred, what would happen to your family?
This is an important question to ask yourself.
In addition to experiencing grief, your family would suffer in other ways.
1. Loss of Income
One of the biggest challenges could be a loss of your income.
If you are the primary provider for the family, then your death would leave them in financial trouble. The loss of your salary would be a major hit on family finances.
Even if you and your partner work together to pay the bills, your death would cause financial difficulties.
Your partner would bear all of the burden on his shoulders.
If you have life insurance, then you don’t need to worry about your loss of income.
Upon your death, your family would get the money that they need to keep up with the bills.
2. Covering Funeral Costs
Funerals are necessary, but they are also expensive. Often, funerals cost thousands of dollars. The average funeral costs $7,181.
With such a high price tag, a funeral could cause financial troubles for your family.
It’s not often that families have thousands of dollars available. Your funeral could leave your family in debt.
Fortunately, your life insurance policy could protect your family.
With your policy, your family can cover the costs of your funeral and more.
You can get the funeral you deserve without causing stress to your loved ones.
3. No Time to Grieve
The last thing a grieving spouse should need to worry about is paying the bills.
Unfortunately, it’s a common occurrence.
Mortgage payments and student loans don’t wait for the grief to end.
Instead, they cause more stress.
An already grieving spouse is likely to crack under the pressure. The debt could overwhelm them and cause even more troubles.
With life insurance, your family has more time to focus on grieving. Your spouse doesn’t need to rush out to get a second job. He can use the life insurance policy to pay the bills.
Although dealing with grief isn’t easy, having a secure financial future helps.
Common Questions About Term Life Insurance
There are several questions people often have about term life insurance.
If you are unsure whether or not term insurance is for you, then read on to learn more about the policy.
There are a lot of misconceptions about term life insurance.
Before you choose a policy, you should find out the truth about this type of insurance.
1. How Do Taxes Impact Term Life Insurance?
When you have a life insurance policy and you pass away, the money from the policy belongs in your family’s pocket.
Many individuals wonder if taxes impact that money.
Therefore, your family does not pay any taxes on the money they receive on their policy. This makes life insurance a great investment into the future.
There is one exception to the tax-free rule.
If the benefits become a portion of your estate and the estate is large enough, then there could be taxes.
However, this only applies if the beneficiary is not your spouse.
If this is a concern for you, then you can speak with a financial or insurance expert for more answers.
It’s also important to realize that the no-taxation policy only applies to term life insurance.
When you opt for a different policy, the regulations are different.
2. Is Term Life Insurance Only for People with Families?
One common misconception is that term life insurance is only for married individuals.
However, this is far from the truth.
Term life insurance is an option for anyone, single or married.
You might not have a spouse today. But that could soon change. Getting a life insurance policy simply ensures that you get a low rate for your premiums.
You can also choose your beneficiary for your policy.
If you don’t have a spouse, then you might consider making your parents the beneficiaries.
Doing so could save them from being responsible for your student loans.
3. Will a Pre-existing Condition Keep Me from Getting Term Insurance?
Some people hesitate to apply for term life insurance because they suffer from pre-existing medical conditions.
However, a medical condition should not stop you from getting life insurance.
When you’re young, a pre-existing condition does not preclude you from term life insurance. In fact, it doesn’t even mean that you will have high premiums.
There might be an affordable policy available to you.
When it comes to pre-existing conditions, there are other factors that affect your coverage.
For example, a condition that is under control is not a high risk to insurers. You could be eligible for low premiums.
Due to your young age, your insurance premiums could still be low.
By getting term insurance in your 20’s, the policy could be affordable.
On the other hand, waiting until your older could break your budget.
4. Can Seriously Ill Individuals Get Term Life Insurance?
If you suffer from a serious illness, then you are a high-risk case.
But once again, this does not make you ineligible for insurance. You might be able to find a policy that works for you.
The best way to find out if you are eligible for term life insurance is to speak to an agent (like us).
It doesn’t hurt to ask, and it’s the only way to find out about your options.
5. How Long Does Term Life Insurance Last?
When it comes to term life insurance, there are different options.
You could go for a short-term option, such as a 10-year term.
When you are in your 20’s, a 30-year term insurance policy gives you great coverage.
If you have children at a young age, then your children will be adults when your policy expires. They might be out of the house and on their own by the time it expires.
If something happens to you before the policy expires, then they have the financial help that they need.
Term life insurance can protect them.
An Overview of Term Life Insurance for 20 to 29-Year-Olds
The way you plan for your future can shape your future. When you’re in your 20’s, the decisions that you make can have a profound impact on your life.
They mold your life for years to come.
One of the most important decisions that you can make is to get term life insurance.
By getting a policy, you can make a secure future for your family. You never know what the future holds, but you can prepare for it.
There are many reasons you should consider a term life insurance policy.
Whether you want to protect your parents from your debt or provide for your own family, a policy can help you.
It keeps your loved ones out of debt and helps cover your funeral costs.
Taking Steps in the Right Direction
When you get a term life insurance policy, you take the first step towards planning for your future.
It’s something that everyone in their 20’s should consider.
Contact us and take the steps towards making a brighter future for your loved ones.