Life insurance for young people is an article about how to begin setting aside money for the future

Life Insurance for Young People and why you should consider it.

Young people at a concert making a sign of a heart with their hands

Regardless of your age, a life insurance policy can be an important element of protection for you. If you’re young and healthy, a policy can help your loved ones manage unforseen expenses in an extremely difficult time, should something unexpected happen to you.

If you’re planning to have a family in the future, purchasing life insurance now could be an affordable way to protect them financially. Young people usually don’t consider things like this, but they do happen. There should be proactive thinking in these types of situations. This could be something that could benefit both you and your family, even while you’re still alive.

Here’s reasons why you should buy Life Insurance even if you’re in your 20s and 30s.

It guarantees the ability to be insured :

Life Insurance rates are determined by two things, the age and health of the person to be insured. So the younger you are, the better your rates are going to be.

It could provide funds for funeral expenses:

A life insurance policy will cover your final expenses so that you don’t have to have others be concerned with that burden.

It can build cash value:

If you purchase the right policy when you’re young, then you might be able to cash the policy in and get less expensive coverage and use the money for other things. These funds can also be used to borrow against in an emergency. The loan must be repaid or it will be taken off of the face amount, along with interest.

Income replacement:

Life Insurance policies can replace the income should one of the earners in the household die unexpectedly. This will make sure that the family at least has the ability to deal with those expenses during a very difficult time.

College expenses for children:

Life Insurance is an excellent source for college funding because it can cover college expenses should something happen to one of the parents. Also, unlike a 529 plan, it isn’t included in the calculation for schlorships. It is an asset that can be given to the college aged student without it affecting financial aide in the same way.

Grandparents can also use life insurance as a way to pay for their grandchildrens college fund. It can be set aside specifically for that purpose if placed in a trust.

The proceeds from Life Insurance can pay off taxes and other debts.

If you don’t want to leave your family to have to pay off some or all of the debt that you have, life insurance can cover such things as taxes, auto loans, mortgages and student debt. Inheritances can also be passed along that way, to help avoid estate taxes.

Why should young families have life insurance?

You’re at the stage of your life when you’re growing your family. How can you protect everyone in the event that something happens to you.

Life insurance can help cover so many eventualities from replacing years of income cut short by an untimely death to providing for extra expenses as your children grow older.

Life insurance pays out a lump sum of money to your beneficiaries It is not intended as a way to replace your income, but rather it is meant to help to sustain your family during a difficult time, cover your final expenses and debt. This payout also is tax free, so that’s another benefit.

The 6 Best Life Insurance Companies for Young Adults in 2022

Best Overall : Protective Life

Best Term Life : Transamerica

Best Whole Life : American National

Best for Young Families : Mutual of Omaha

Best for people who smoke: Americo

Best for No Medical Exam : Nationwide

Why we made these choices.

Each of the above selections were made based on the price of the coverage for each individual situation and what the companies offered. It would be advisable to go to each company website and determine what benefits best suits your needs and evaluate how their products might fit into your specific circumstances. Advertisers or paid endorsements did not influence our decisions.

Which policy should we get?

Life insurance is not a topic most young people want to think about. But the fact remains that life insurance is one of the best ways to protect your family’s financial future. The younger you are when you purchase your policy, the less expensive it will be.

So it is always advantageous to get life insurance while you’re young. When you get older you could develop health issues which might make you uninsurable. As you get older the price of your insurance will increase, as it is based off of two things, your age and health condition.

Not only will you pay less, but your insurance can help in many other ways because life insurance has what’s called “living benefits”. Things like cash value, an accelerated death benefit that can be used while you’re still alive should you become terminally ill. Also other add on riders that can be purchased, often at a very inexpensive cost.

What are the best types of policies are top for young adults?

Term Life Insurance:

Term policies are the most basic type of life insurance. It provides coverage for a specific period of time and pays out if you die during that time. Term policies are usually less expensive than other types of life insurance. The coverage amount can be adjusted to fit your needs and budget. This type of policy should only be considered for a certain amount of time as the cost of the insurance will increase at the end of the term. It is advisable to purchase a new life insurance policy after the time runs out on term coverage as the price will increase dramatically, even though the death benefit will remain the same.

For most young adults, term life insurance is usually a good choice. The lower cost makes it much more affordable and in a lot of instances it can be switched over to permanent insurance, saving you hundreds, if not thousands of dollars in coverage and it is much easier makes to buy and keep until you’re well on the road toward a time when you might be able to better afford permanent coverage.

Mortgage Protection:

There is an insurance specifically designed for Mortgage Protection. It is usually a declining insurance that is less expensive than other insurance because the face amount decreases as the amount of the mortgage decreases. As an example, it will cover a 30 year mortgage and should the owner pass away during year 17, it will pay whatever the balance is at the time of their passing. Another example, if you have a $500,000 mortgage on your house and you die before the loan is paid off, life insurance could help pay that off. This is the perfect term life insurance for homeowners, because of the lower cost. This also allieviates the worry about losing a home should something happen to one of the breadwinners in the family.

Return of Premium:

The main policy benefit of a return of premium policy is that the premiums are returned at the end of the term period. This is basically a Term Life Insurance policy that has the additional benefit of getting the premiums back at the end of the term. It is more expensive than a term policy, but if you can afford it, it might be worth the extra expense, because you can’t lose with a policy like this one. If you don’t use the death benefit, then all of your money is returned.

Universal Life Insurance:

Universal Life Insurance is a form of a Whole Life Insurance policy. It has different characteristics than a whole life policy. This policy will last you your whole life as long as you pay the premiums, however the policy has the capacity to use the cash value to pay the premiums. Unlike a Whole Life Policy,where the premiums are fixed, the cash value can be used to pay the premiums when times might become difficult. Also, the excess in the policy can be paid out along with the face value of the policy.

Permanent Life Insurance:

Also known as Whole Life Insurance. This policy will cover you your whole life and the premiums will stay the same. This also has a cash value component, however this will only pay the face amount of the policy. This is more expensive than term, but it won’t expire like Term Insurance coverage. The cash value can be borrowed from in the case of an emergency, however, it does need to be repaid or the loan is taken out of the death benefit when the claim is made againt the policy. Whole Life policies will typically have a level premium, meaning that the cost will stay the same throughout the polcy, they won’t go up.

However there is something else that you need to look out for. The cost of the insurance will go up as the person ages and this can sometimes eat into the cash value of the policy. It is important that you speak with the agent regarding what happens, when and if the cost goes up.They should be able to give you this information or obtain it from the carrier. So my suggestion is to look into that when you purchase the coverage, it can save you a lot of trouble later on when the covered person gets older.

What are some other important things that I should consider when getting Life Insurance coverage?

Should I purchase life insurance for your my children?

A lot of parents who have life insurance policies wonder if they should get coverage for their kids. Life Insurance for children can be purchased as riders on your adult policies. A rider is something that can be added to an exisiting policy. There is no need to purchase an extra policy for a child, just add them onto the policy with a rider. These riders will sometimes come with no additional charge or a minimal fee of less than five dollars. You can simply contact the insurance carrier and ask to have your child added to the policy and they will give you the information that you need.

Should we get a policy for both the husband and wife or just the person who is bringing the income into the family?

Many of us feel that neither ours nor our spouse’s duties are dispensable or easily replicated – that’s why it’s called partnership. Even so, on average, life insurance for stay at home spouses is rare. Eighty two percent of stay at home mothers and fathers rely simply on their spouse’s group or individual life insurance policy. These policies aren’t bad policies, they should be considered as not permanent and that other options should be explored. Also, they usually only cover the working spouse.

This however doesn’t take into account that the coverage is still needed for the spouse that isn’t working because of the cost of having to replace the time and effort of the partner could be quite costly. This policy can be purchased pretty inexpensively while you’re still young. Life insurance policies for young people are much less expensive than they would be if you waited until later years, but they are still as important as insurance for the working spouse.

Final Verdict:

All of the best life insurance companies for young adults are reputable, have strong financial ratings, and have a lot of industry experience. Some of the companies offer multiple types of policies, and others specialize in term life insurance. Some offer high coverage limits, and others offer online quotes. We recommend checking our suggestions above. These companies have competitively priced policies and provides quotes for policies online.

Life Insurance is something that we admit that we need, but it isn’t always viewed as a necessity and often viewed as an expense. This is understandable because it is something that people believe will benefit someonelse after they are gone. However, if you understand that life insurance is important for the security and well being of your family, and that it is an important part of any financial plan, then maybe you can begin to see it’s value.

The number of people who are uninsured continues to grow, often leaving that burden to someonelse after they are gone. The cost of insurance for a young person can be less than half the cost of a starbucks cup a day or half the cost of one lunch eaten out each week and provide a valuable benefit to the people that we care about.

If you have any questions we’re here to help. We’ve been in this business a long time and we understand the needs of our clients, so don’t be hesitant to give us a call and we’ll do our best to help you to understand and purchase the life insurance that you need.

please feel free to reach out to us at www.awareinsurance.com/contact-us

or email me at bill@awareinsurance.com

Written by Willie Ware