The Best Life Insurance Young Adults Should Own

Shawn Plummer

CEO, The Annuity Expert

Are you a young person between the ages of 18-30? Odds are, you may be feeling intimidated by the thought of life insurance. Many think it’s not something they need to worry about yet, or even wonder if they can afford it. But obtaining life coverage now—while you’re still young and healthy—can have numerous long-term benefits and secure your financial future for years to come! In this guide, we’ll explore why life insurance is such an essential investment for young adults and provide tips on how to find the right policy. Read on to learn more!

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Should Young Adults Buy Life Insurance Coverage?

Many young people think that they don’t need life coverage, and it’s not difficult to see why. However, while you may not think that you need it now, having life insurance provides financial security for your family in the event of an unexpected tragedy.

In addition to providing financial safeguarding, life coverage can help ensure that your loved ones are not burdened with debt if something happens to you. This could be especially important for young adults who are just starting in life and may not yet have a significant financial cushion. If you have any debts, such as student loans or credit cards, having life coverage can provide peace of mind that those obligations will be paid off if something happens to you.

Life coverage can also help young adults save money for their future goals. For example, many policies allow you to build cash value over time, which can be used for a down payment on a house or starting a business. Not only does this provide security for the future, but it also allows you to take advantage of tax benefits associated with life policies.

Finally, life coverage can help young adults replace lost income if their breadwinner were to pass away. This can be especially important for young couples with children, as it provides the financial security needed to continue providing for their families.

Do I Need Life Coverage if I am Young and Single?

The answer to this question depends on your financial situation. If you have dependents, such as children or elderly parents, that rely on your income, you may need life coverage to provide for them in the event of your death. Even if you are single and don’t have any dependents, life coverage can be an essential part of your financial plan. It can provide a source of funds to cover final expenses and other debts or give you the flexibility to leave something behind for charity or loved ones.

Ultimately, only you can decide if life coverage is right for you at this stage. Consider speaking to a financial advisor about your situation to determine which policy and coverage amounts are best for you.

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Is Life Insurance Cheaper For Young People?

Your life policy premiums will be lower the younger and healthier you are. With that being said, getting life coverage early in your adulthood may be beneficial to secure a more affordable rate for years. Consequently, these prices increase with age, and getting coverage earlier could help save money now and later!

Additionally, the price of life coverage depends on your lifestyle choices. For example, suppose you are a smoker or partake in dangerous activities such as skydiving or motorcycling. In that case, your premiums will be higher due to the increased risk associated with those activities. However, by making healthy and safe lifestyle choices now, you can lower your premiums down the road.

Finally, it is essential to note that certain medical conditions can affect your life insurance premiums. For example, getting coverage may be more expensive if you have any pre-existing conditions or illnesses; however, options may be available depending on your provider and specific situation.

What Type of Life Insurance Should Young People Get?

Term insurance can last up to 40 years and is 5 to 15 times more affordable than permanent life, so it’s a good option for most people, including young people. In addition, term insurance offers coverage for a specific period, allowing you to choose the right amount for your situation.

It also allows you to select options like renewable or convertible, so you can adjust coverage as needed over the years. Permanent life is more expensive but lasts your entire lifetime and provides lifelong protection. It also offers a cash component, which you can use to borrow against or access for retirement income.

Permanent life provides excellent flexibility for young adults with long-term financial goals and wanting to grow their coverage over time. It’s also a good choice for parents with young children who prefer lifelong coverage and cash value.

What Types of Term Life Insurance Are Best for Young Adults?

The best type of term insurance for young adults is typically a 20-year or 30-year level term policy. These policies provide the most coverage for the lowest cost and are designed to cover you until your retirement age. For those in their twenties, this level of coverage ensures that they are taken care of regardless of unforeseen events like premature death, disability, or medical emergencies.

Term life insurance is also attractive for young adults due to the flexibility of the policy. Unlike whole life insurance, you can adjust your coverage and premium amounts as needed throughout the policy. If your circumstances change and you need a different level of coverage at any point during the policy, you can make the change without having to start a new policy.

Finally, some term life insurance policies come with riders (additional coverage options) that give you more protection and can be beneficial for young adults. These include accident and disability benefit riders, which provide additional financial support in case of an unexpected event. In addition, riders that cover specific medical treatments like cancer or heart disease can also be added. These are often built into term life insurance policies, so reviewing your policy and seeing if they are included is vital.

What Are the Different Types of Permanent Life Insurance?

A Permanent life policy offers a variety of protection and financial benefits that last for the policyholder’s life. There are several different types of these policies, each with its specific features:

  • Whole Life Insurance – A whole life insurance policy provides a guaranteed death benefit if premiums are paid on time. It also offers a cash component, which accrues over time and can be used to pay premiums or borrowed against if necessary.
  • Universal Life Insurance – This type of policy provides the same death benefit as whole insurance but with additional flexibility in premiums and investment options.
  • Variable Life Insurance – This policy allows for more investment choices and the opportunity to earn higher returns. It also offers a death benefit, but it’s tied to the performance of the underlying investments.
  • Variable Universal Life Insurance – This type combines elements of variable life insurance and universal life, providing a death benefit that can fluctuate with the performance of the underlying investments.

No matter which type of policy you choose, permanent life insurance can provide financial coverage for your family and help create a secure financial future for you and your loved ones.

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Is Whole Life Insurance Good For Young People?

This type of policy may be a good choice if you want lifetime coverage with the added benefit of cash value accumulation. Whole life insurance provides a guaranteed end-of-life benefit and level premiums so that you can plan for your family’s long-term financial safety.

These policies also have dividends, making them attractive to young adults who want to save or invest money. The value of a whole-life policy is tax-deferred, meaning that any growth in the policy’s value can be withdrawn or borrowed against without paying taxes. This makes whole life an excellent tool for young adults looking to save money and plan for their future. The potential to build up cash value also offers young adults a way to supplement retirement income in the future.

However, young adults must consider other factors when deciding whether this policy is the right choice. For example, these policies tend to be more expensive than other types of life insurance, so it can be difficult for young adults on tight budgets to afford them.

Additionally, the dividends offered by whole-life policies may not be competitive enough to make up for the cost of the policy. Therefore, young adults should also consider the returns they could get from other investments and compare them to what life offers.

Is Universal Life Coverage Good For Young People?

Universal life is a type of permanent coverage that offers incredible flexibility with premiums and end-of-life benefit amounts. As a result, younger adults can guarantee lifetime protection by simply maintaining the premium. Additionally, along with the assurance of permanent security, universal life provides an investment component that allows for tax-deferred growth opportunities and potential cash value accumulation.

However, it’s important to note that universal life coverage can be costlier than other forms of life coverage and may not suit the financial means of young adults. Plus, ensure you have enough coverage for your needs since no death benefit will be distributed if a policy expires or is given up.

Is Variable Life Insurance Good For Young People?

Variable life insurance is an excellent option for young people since it allows them to save and invest their premiums to build cash value over time. In addition, variable life policies can provide flexible death benefits and tax advantages.

Additionally, the flexibility of the policy allows individuals to adjust their premium payments or face value when needed. As a result, this type of life insurance is an attractive option for young people looking for an investment with the potential to grow over the long term.

Furthermore, the cash component from variable life policies can help individuals build wealth and provide financial protection in the event of an unexpected death. Thus, this policy offers many economic benefits that make it ideal for young people.

That said, variable life insurance may not be the right option for all individuals. Those more risk-averse investors might want to contemplate alternatives such as whole or term life insurance. Besides, variable policies come with a costly price tag and require significant long-term contributions if you hope to make it worthwhile.

Is a Variable Universal Life Policy Good For Young People?

Variable Universal Life Insurance (VUL) can be an excellent option for young people looking for flexible, long-term life insurance coverage. VUL allows policyholders to adjust premiums and death benefits at various points throughout their lives, depending on their changing needs or financial situations.

VUL policies also come with a savings component, allowing policyholders to build cash value over time. This can benefit young people who are just starting and may not have the financial resources to make large lump-sum payments into a traditional life insurance policy.

These policies also come with various investment options, allowing young people to invest in various funds and stocks that can grow over time and provide a more considerable end-of-life benefit. This could benefit younger policyholders who want to ensure they provide sufficient coverage for their family in the event of an untimely death.

Finally, VUL policies may also come with living benefits such as an accelerated death benefit or chronic illness rider, which can be beneficial for young people who may need access to cash in the event of a medical emergency.

Overall, Variable Universal Life can be an excellent option for young people looking for flexible life insurance coverage that will grow with them throughout their lives. With its adjustable premiums and death benefits, savings component, investment options, and living benefits, VUL can be an excellent way for young people to ensure their loved ones are taken care of in the event of an untimely death.

Is Term or Permanent Life Insurance Better For Young People?

Young adults regularly face complex financial decisions, and one of their biggest is if they should select a term or permanent life insurance. Term life assurance offers a certain quantity of coverage at an unchanging cost for a predetermined time, usually 10, 20, or 30 years. If the policyholder dies during this period, their beneficiary will receive the end-of-life benefit.

In comparison, permanent life insurance provides coverage for your lifetime and includes a cash component that gains interest over time. As a result, the premiums are typically higher than those of term policies, but the death benefit remains intact throughout your lifetime and can be used as a source of funds in retirement.

What Age is Best to Buy Whole Life Insurance?

As we age, our susceptibility to underlying health issues augments, leading to higher mortality rates and costlier life insurance policies. You usually pay less for a term life policy at 20 than waiting until you’re 40. If you wait till 60, it would be even more costly if purchased earlier.

On the other hand, a permanent life policy accumulates value over time and can also be used as an investment. While premiums tend to be higher initially, they remain consistent throughout the policy’s lifetime. As such, it pays to purchase this type of insurance early on in life while you’re still healthy to reap the benefits as you age.

Life insurance is a crucial component of any long-term financial plan. It can provide security to your family and loved ones if something should happen to you, and it can also be used as an investment tool for the future. Investing in life insurance early on ensures you’ll have the coverage you need at a rate that won’t break the bank.

Is it Too Young To Purchase Life Insurance in Your 20’s?

If you’re in your twenties, there are several compelling reasons to invest in life insurance. Not only will the premiums be cheaper and approval chances higher than if you wait until later on, but other benefits include more significant cash earnings, which can help cover debts, surprise expenses or even act as a down payment for a mortgage loan.

Additionally, if you have any dependents — such as children or an elderly parent — life insurance can provide a financial cushion and peace of mind in the event of your untimely death.

Finally, specific life insurance policies are income tax-advantaged, meaning that any money earned through interest on these policies is exempt from taxation.

What is the Best Life Insurance For Young Adults?

The best life insurance for young people depends on individual needs and preferences. Generally, term life insurance is often the most affordable option for younger individuals as it covers a specific period with a lower premium than other forms of coverage. Additionally, since term life does not accumulate cash value like whole or universal life policies, there are no extra costs, and the premiums are typically much lower than other life insurance policies.

For young families, whole or universal life may be a better coverage option as it provides a death benefit that will last throughout their lifetime and accumulate cash value over time. These policies also offer flexibility in terms of premium payments, investment options, and loan options, which can be helpful for young people looking to build their wealth over time. Additionally, these policies provide a guaranteed death benefit that cannot decrease over time due to changing market conditions.

How Do I Get a Life Insurance Policy as a Young Person?

Purchasing life insurance is simple and can be done in just four steps:

  1. First, determine your coverage needs – Assess the amount of life insurance you need to cover your family’s lifestyle and financial obligations if something happens to you.
  2. Compare policy types – Review the different types of policies that are available and decide which is most suitable for you.
  3. Compare plans – Research the best life insurance companies and compare their rates, coverage, and customer service history before making your final decision.
  4. Purchase the policy – Once you’ve decided on the right plan and a life insurance cost that meets your needs, buying life insurance is easy. Contact a broker or the best life insurance company for your needs to purchase your policy.

Next Steps

In conclusion, life insurance is an excellent option for young adults that should be seriously considered. It provides security and stability and gives you peace of mind knowing that your loved ones won’t be left with an unmanageable financial burden in the event of their death. With so many policies available and different ways to customize coverage, finding the right policy for you should not be difficult. Before taking out any life insurance policy, make sure to do your research and compare plans to see which fits your unique needs best. With careful consideration, you’ll find that having life insurance as a young adult carries tremendous benefits and provides long-term protection you will be grateful to have later on in life.

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Frequently Asked Questions

Is 21 Too Young For Life Insurance?

Age should be no deterrent – if you have a family who counts on you financially, life insurance is a wise choice. You’re never too young to invest in protecting your loved ones with life insurance coverage.

Is 30 Too Young For Life Insurance?

If you’re in your thirties and healthy, now is the perfect time to purchase life insurance. This age group can benefit significantly from affordable coverage through term policies.

What Are Some Benefits of Buying Life Insurance at an Early Age?

There are plenty of benefits! Some of them include the following:

  • Lock in unbeatable rates
  • Shield your family
  • Establish creditworthiness
  • Prepare for the future with coverage
  • Leverage discounts and save

Is a 20-Year Term Life Insurance Policy Worth it?

A 20-year term life insurance policy is ideal for those seeking long-term security. Not only does it cost less than permanent life insurance policies, but you can easily switch or extend your coverage in the future! Enjoy flexibility and protection with this convenient option.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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