Life insurance is not something that most young people prioritize, but they should. There’s no better age to start saving for retirement, setting up an emergency fund, paying off debt, and saving for a mortgage than in your 20s.
Don’t be deceived by the fact that you’re young and healthy. Risk factors like illnesses or injuries are respecters of none, and they may strike at any time. So, why is it advisable to take out life insurance in your 20s? We discuss more below.
If you’re in your 20s and unmarried, chances are you’re still living with your parents or renting an apartment. But will the current circumstances last forever? Surely not. You will soon start feeling the urge to buy a home once you hit your 30s and have your own family.
There aren’t many better and cheaper ways to acquire a home than through a mortgage. But to do so, you may require a mortgage life insurance to protect your home should you pass away prematurely.
The best part about home mortgage protection is that the sum assured decreases over time, so it’s cheaper from the onset. On top of that, the policy is moderately affordable, thus suitable for most 20-year-olds who are still grappling to find financial freedom.
Should you pass away during the policy period, the insurer will pay a lump sum to your beneficiaries so that they can pay off the mortgage. This will help to set your family free of any financial distress or fear of eviction.
All risk factors considered, getting mortgage life insurance is one of the best ways you can secure your future and that of your loved ones at a young age. It’s a win-win move that will grant your family a permanent roof over their head should you pass away or outlive the policy.
Life insurance costs less when taken at a young age than during advanced ages. That’s because older people are at a higher risk of passing away due to risk factors such as lifestyle illnesses than those in their 20s.
Remember, your health condition is one of the key factors an insurer will consider when determining the premiums payable. Most people in their 20s have no life-threatening illnesses, hence the reason they are charged lower rates.
Repayment of student loans
One of the few pressing burdens that most 20-something-year-olds grapple with is student loans, alongside credit card debt. Usually, government-given student loans are written off automatically if you pass away. But that’s not the case if it’s a private loan that you cosigned with your parents.
If you pass without clearing the loan, the burden will befall your parents or anyone else who guaranteed you. To spare your loved ones the potential financial hardships, we recommend you get a life insurance cover. This policy can pay off every bit of your student loan or credit card debt if you pass away prematurely.
Still in the line of taking care of your left-behind expenses, life insurance can meet all the funeral costs and any other final expense. This ensures that you get a decent send-off that doesn’t also cause financial stresses to your loved ones.
How to buy life insurance in your 20s
Life insurance isn’t something you just wake up one day and decide to head up to an insurance company. You need to conduct thorough research before committing your money. Below are a couple of useful tips to help you get the right cover.
Before anything else, decide how much coverage you need and how much you can afford to pay in monthly premiums. You don’t want to subscribe to a cover you will struggle to pay for or worse, miss payments.
After deciding the right package, consider your buying options. If you’re employed, ask your employer if they offer life insurance as part of the employees’ benefits. This way, you could be lucky to get the policy at a discounted rate. Otherwise, your only other option is to find a reliable life insurance provider and get the policy on your own.
We hope that this post helped to change your perception on life insurance. Remember, you do not necessarily have to go for the permanent policies if you cannot afford those yet. There are cheaper and more convenient alternatives like mortgage life and level-term insurance. The idea is to protect as many areas of your life and assets as possible to set a great foundation on which to base your future.
What is hindering you from taking out life insurance in your 20s? Please share your feedback with us in the comments below.