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Getting Life Insurance in Your 20s Pays Off

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Should I Get Life Insurance in My 20s?

Most young Americans are not thinking about life insurance policies, but they should. Life insurance is the ultimate financial tool for those big “what if” moments. It can be useful even when the death benefit is not triggered, as long as it is used appropriately. Life insurance is not a panacea, and some younger Americans may not have the resources to devote to large policies.

Without other considerations, life insurance for a 22-year-old is a better proposition than life insurance for a 55-year-old.

Reasons to Buy Life Insurance Young:

The most obvious reason to buy life insurance is when you have clear insurable interests and want to be financially protected from a catastrophic accident. For example, you may have large debt obligations from student loans or a mortgage that you do not want to be passed on to someone else.

Types of Life Insurance:

Insurance is typically divided into two categories: term and whole life. This undersells the diversity of insurance products available to consumers, since there are many different kinds of term insurance and many different kinds of permanent insurance.

Term Life Insurance:

Term insurance is designed to cover a specific set of possible events over a defined period. For example, a level-premium term life insurance policy might offer $200,000 worth of coverage over 20 years and cost $20 per month until the end of the term.

Permanent Life Insurance:

Unlike term insurance, permanent life insurance offers more than just a death benefit that lasts your entire lifetime. Permanent life insurance policies offer the chance to accumulate cash value, and cash value works better for people in their 20s than people in their 50s.

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