With all the different types of insurance out there, it can be easy to overlook life insurance. Some people put it off and say they’ll wait to purchase it until they’re older and more financially stable. This, however, can be devastating when tragedy strikes.
At age 24, I got life insurance. Just this week I’ve been approved for a 20-year life insurance policy. I’ve been thinking about getting life insurance for the past year, and I’ve finally decided to take the leap of faith thanks to J Money’s Life Insurance Mad Lib.
Getting life insurance in your 20’s isn’t for everyone though. Consider these things before deciding if you should make this important decision.
Get Life Insurance if You Have Dependents
The first and main reason why I decided to take the plunge into the life insurance realm is because I’m married. If I ever do kick the bucket in the next couple of decades (knock on wood), I want money to be the last thing my wife has to worry about.
Imagine if you were to bite the dust today. What would the financial picture be like for your family? Do they have what they need? Does your spouse have the education to work and provide a solid income? If you have kids, is there enough money to pay for their college?
If you aren’t married or don’t have any dependents, then the only reason to get life insurance would basically to pay for funeral costs if you don’t have enough savings for that.
If you are married and love your spouse and/or children, then you should get life insurance. If you have lost a loved one, you know how hard that can be. Add debt onto the loss of a loved one and it’s difficult to bear.
As with all things finances, plan for the worst and hope for the best.
Pay Lower Life Insurance Rates if You Sign Up When You're Younger
Term life insurance has cheaper rates than whole or universal life insurance. It simply is more affordable for younger people in their 20’s and 30’s. The younger you are when you get life insurance, the cheaper it will be. Simple as that.
Term life provides money to your beneficiary if you pass away within a certain time period. For example, I purchased a 20-year policy. If I pass in the next 20 years, my wife will receive the policy amount. If I’m still alive after 20 years, then I’ll get nothing and the policy expires.
I’m not a fan of whole life insurance because it acts as a sort of savings account. Your money would be much better off in a personal savings account or invested elsewhere. You don’t need to bundle a few things together and then pay an extra premium on top of that. Term life insurance is a bigger bang for your buck.
Term life insurance is also simple, easy to understand, and relatively cheap for people in their 20’s. I calculated it out, and I’ll only pay 1.4% of the actual policy payout over the course of 20 years. That’s more than worth it in my opinion!
Covering Outstanding Debt Like a Mortgage
Another top reason why you should get life insurance is if you’ll have any outstanding debt once you die.
Since my wife and I just bought a home back in May, that’s a decent amount of debt which would need to be addressed if one of us passes away.
The ability to pay the mortgage off in one fell swoop would be quite the relief. I can hardly even imagine the feeling of not having a mortgage payment. I want my family to not worry about a mortgage if I ever do pass into the ether in the next couple of decades.
More Confidence for the Future
Ultimately, purchasing life insurance in your 20’s will give you confidence in your future and a better peace of mind. I for one will sleep just a little bit better knowing that my wife will be financially secure if I pass on sooner than expected.
There’s already plenty to worry about in life. Getting life insurance will mean having one less thing you’ll need to worry about.
A good rule I like to go by is: “If you want less stress in your life, then work towards becoming financially stable”.
If you’re in your 20’s and you answered yes to one or more of the above questions, then strongly consider purchasing life insurance. You’re loved ones will have a solid, secure future because of it.