Young adults have their advantages and disadvantages. We’ve talked about this before. We all know this. What we lack in experience, we make up for in ambition, good health and a future full of possibilities. Of course, these are all generalizations. Not every young adult lacks experience, just like not everyone has good health. Not everyone has a future of possibilities. This is what we all must account for: the improbably chance that we may get hit by a bus or not wake up tomorrow. No one likes to talk about this because it makes us feel uncomfortable. But it’s time we start changing that.
It was a couple years ago that I started to think about life insurance for the first time. It was the point at which my wife and I finally started making more than we needed to get by financially. Before this point, we simply didn’t have enough money to afford the premiums – and I’m not sugar coating it. I had told myself that one of the first things I would do with extra money was to buy life insurance, so that my wife would be able to afford life without me. And that’s exactly what I did.
Why Young Adults Typically Don’t Buy Life Insurance
Most young adults don’t think this way. Instead, they are busy paying back student loans or financing their new car. Many people suggest that this is a sign of irresponsibility of young adults, and while that may be partially true, this explanation is too simple. Many young want to thrive financially, but just don’t know how or why. In fact, I think there are a number of reasons why young adults don’t buy life insurance:
- They don’t make enough money to pay for premiums
- No one has told them that it is important to do
- They think they are invincible (for now)
- They are prioritizing paying off their loans
- They would rather spend money on other fun gadgets or travels
- They don’t know how or from whom to get a life insurance plan
- They don’t have a family that they would leave behind that would make it necessary
- They don’t really understand the benefits of life insurance
I could go on and on, but the point is simple. There are a number of reasons why many young adults don’t elect to get life insurance. While there are a ton of reasons, it shouldn’t surprise you to see some patterns across all of the reasons I came up with: not understanding the need or benefits.
Top Reasons to Get Life Insurance at a Young Age
If you are a young adult and don’t have life insurance, maybe it’s time to consider getting life insurance. There are a number of benefits and/or reasons to get life insurance, especially as a young adult:
- It provides financial assistance to family left behind – Usually life insurance is to make up for loss of the primary income earner, but this isn’t the only use of it. It can provide a cushion for surviving family members to properly grieve your death. It can also help family members pay for the funeral and related costs.
- It provides peace of mind – One of the best benefits that I have found, after getting my own life insurance plan, is that it provides peace of mind. The ability to sleep at night is under-valued by us recent college graduates, who are used to ‘all-nighters’. But, this is an important thing. There is no reason to add stress to your life if you can change it.
- Getting life insurance early reduces premiums – Buying life insurance at a young age ensures that you lock in an lower rate when you are healthier (at least statistically).
- You can afford to take more risk – What young adult doesn’t like risk every once in a while? While this reason is only slightly serious, having a life insurance plan does provide you with the ability to take more risk, physically and financially. You shouldn’t be jumping off bridges or gambling your life’s inheritance on a game of poker, but buying a home with a large mortgage is significantly safer for your family when you have a large life insurance plan.
- It helps you prioritize your spending – Getting a life insurance plan early helps you prioritize your spending. It reminds you that the fun gadgets and trips are “extra,” and protecting your family from an unexpected death is more important. This type of reminder affects the way that you approach finances. It helps you stay on track and keep your priorities straight.
Actions to Get Life Insurance
Getting life insurance doesn’t have to be a mystery. There are a number of things that every person must do when buying life insurance. While it may not follow this order every time, here is a good overview of what is involved in getting a life insurance plan:
- Determine the Need – In other words, figure out how much protection you would like to leave your family. This is also known as the death benefit. It’s not a pretty way to phrase it, but that’s exactly what it is. Some people calculated it by adding up their total debt with a set amount of years of income. Since my wife and I don’t have any debt, we elected for a couple years income (we could do more, but we both work so it’s not as necessary to have a high death benefit).
- Figure out how much you can afford to pay each year/month – This may also affect how big of a death benefit you elect. Paying your bills each month is a real concern for a lot of people and you need to take this into consideration when you select your plan. There’s no reason to get a life insurance plan if you won’t be able to afford the premiums in a year.
- Determine the type of plan – This may come as a shocker, but there are two common types of life insurance. There is term life insurance, where you pay a lower premium for insurance for a certain number of years AND there is also whole life insurance (or permanent). There are advantages to both, but you need to decide which is best for you. I went with whole life insurance, but I also understand that other people’s situations make term life the better choice.
- Find a reputable company – Another consideration that you need to take into consideration is the company from whom you are purchasing the plan. Make sure that your plan is guaranteed and also that they have been around for a while. You need someone who is going to be there to pay should the need arise. There’s no reason to risk this for a few dollars a month.
- Talk with an Agent – While it may be possible to do this online, I would suggest talking to a real person. They will be able to give you real advice and make sure the plan is right for you. There will always be people who are out to make a quick buck, but if you find a recommendation from a trusted friend, it decreases your odds of being cheated.
Getting life insurance while you’re young is important. It may not seem like a necessity right now, but it’s a small price in comparison to the coverage that is provided. Don’t risk your family’s future in an effort to save a few bucks. It’s just not worth it.
I’ll be getting term life insurance to cover me until my kids graduate from college. I’ll be waiting until I have a kid to purchase it though so it doesn’t expire too early!
I have to admit I haven’t even thought about life insurance. I know I have a small policy through work, but haven’t bothered to think about it yet because it’s just the bf and I. When we have kids we’ll definitely both get larger policies.
Great idea! I think getting a life insurance will teach them to be more responsible towards themselves and their loved ones. They will also learn how to budget their money well, because they have premiums to pay.
Good post! I think that generally getting it earlier is much better as you can usually get better rates. You can lock up those decent rates and possibly get higher coverage which would benefit your family if you were to pass early in life.