March 14, 2021

Why It's Good to Get Life Insurance at a Young Age

If you think you'd want life insurance in the future, your best bet is to get a policy now. But does every young person really need life insurance?

On one hand, it's much cheaper at this age. And it's easier to get insured too.

Still, not everyone needs to get a life insurance policy at a young age. Find out who should consider a policy and who might be okay to skip out.

Why You'd Want Life Insurance at a Young Age

Life insurance isn't just for married folks or seniors with a lot of money.

In fact, almost every U.S. adult can benefit from a life insurance policy. Here's how it can protect you at a young age.

  1. It can protect your loved ones from paying your debts.
    Do you have any cosigned debt? Maybe it's a student loan, car loan, or a joint credit card account.

    If so, your cosigners would have to pick up the tab if you were to pass away. Inconvenient, to say the least.

    A term life insurance policy for the number of years you plan to pay off that debt could act as protection for your family.

  2. It can cover end-of-life expenses.
    Usually, your estate pays for end-of-life expenses like funerals and burials.

    But younger people don't typically have a hefty estate that would be able to cover everything. (I know I don't.)

    After all, the current cost of a funeral is upward of $8,000[1], depending on which state you live in.

    A life insurance policy can enable your family to make all the necessary arrangements without the headache.

  3. It's way easier to get insured right now.
    You can get insurance later, sure. But right now, it's way easier, quicker, and cheaper to secure a policy.

    Why? As you get older, your chances of developing a health condition go up. And with that, so do your rates. (We're talking $30-$40 per month.)

    By contrast, you could pay just $7-$8 per month for coverage right now.

    Plus, older adults are usually required to take more medical tests as part of the application process.

What's the best age to get life insurance?
The rule of thumb: It's better to buy life insurance at a younger age (between 25 and 40). This is because the rates are much cheaper, and it's easier to apply and get approved for a policy. But don't buy life insurance at an early age just to get cheap rates. You should buy a policy only if you know the benefit would be truly valuable to your loved ones.

Reasons You Can Skip Life Insurance For Now

Although life insurance rates are cheaper for young adults, many can't afford the extra expense. And that's a valid reason to opt-out for now.

If the following apply to you, you can probably skip out for now and consider it later down the line.

  • You don't have any co-signed debts.
  • You're not married or in a long-term relationship.
  • Your estate is enough to cover any end-of-life expenses.

Why is life insurance a bad investment?
Whole life insurance is considered a bad investment because it costs up to 15x more than term life. Plus, the cash value grows slowly and it's hard to know where your premiums are going. In general, a term life policy is a much better "investment". It covers you for as many years as your family depends on your income. The money you save by not choosing whole life can be put into more lucrative investments.

FAQs about Life Insurance in Your 20s

If you're starting to warm up to the idea of getting a policy, you likely have plenty of questions.

Do I have to take a medical exam?
Not necessarily. In fact, many online life insurance companies provide term life policies to healthy young adults with no medical exam. Of course, your experience may vary from insurer to insurer.

Which is better: term life insurance or whole life insurance?
Term life insurance is usually the better choice. The affordable rates make it easier to budget for. Plus, the cash value component of whole life insurance grows at a rate slower than many other investments.

How much life insurance do I need?
There are a lot of ways to calculate your coverage needs, but we think the best method is as follows:

Rule of Thumb for Life Insurance Coverage
Coverage Amount = (Coverage Years × Annual Income) + (Debt + Expenses) - (Liquid Assets + Savings)

Does credit card debt go away when you die?
Credit card debt does not go away when you die. Instead, the assets you leave behind are totaled and applied to your credit card debt.

Family members may also be required to pay off your credit card debt if:

  • They co-signed for a loan or credit card with you
  • They jointly owned a business or property with you
  • They live in CA, AZ, ID, LA, NV, NM, TX, WA, or WI
  • Their state requires paying off debt to resolve the estate

Bottom Line

You're pretty responsible for your age, so why not budget a little per month to protect your family and loved ones in the worst-case scenario?

If you opt for a term life policy with an online life insurance company, you'll be surprised how easy and affordable getting life insurance can be. However, if you don't have co-signed debts, a long-term partner, and aren't worried about funeral costs, you might consider a policy in a few years.


  1. ^ Funeral Costs by State: Bankrate, 2020.

Holly Zorbas is a assistant editor at CreditDonkey, a life insurance comparison and reviews website. Write to Holly Zorbas at Follow us on Twitter and Facebook for our latest posts.

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By Holly Zorbas - Tips for Life Insurance
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