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  • Writer's pictureWing Chan

Should I Get Life Insurance in My 20s?

Updated: Oct 10, 2023

Why you might want life insurance in your 20s Life insurance for a 20-year-old is almost always significantly cheaper than it is for someone in their 30s, 40s, and beyond. Why? Since life insurance is based on the odds of someone dying, the later you'll die, the better for the insurance company so they love young people! Youre young, Youre in the prime of your life. Youre probably pretty healthy. And that means youll have lots of years before you die, meaning your life insurance company can keep your policy in place (and make money) for a while. As a result, if you buy life insurance in your early 20s, youll be able to get it cheaper than at any other point in your life. In fact, young, healthy individuals pay the least for life insurance. Notice that second adjective? The healthier you are, the less youll pay, too, so its worth evaluating your quality of life. If youre making health-smart choices like eating a nutritious diet, exercising regularly, and getting plenty of sleep, you might be able to score lower life insurance rates. Pair that with your young age, and youre set up for the cheapest life insurance possible.

How life insurance works for 20-year-olds A good deal doesnt necessarily equal a good reason to buy coverage. While you technically can get life insurance at 20, it might not be the right choice for everyone. To help you decide if you should consider life insurance, lets take a brief look at how it works. When you buy life insurance, you buy a policy that will pay out a certain amount of money at the time of your death (assuming the policy is still in effect). The payouts are usually pretty huge, ranging from somewhere around $250,000 to millions of dollars. These payouts are called death benefits because they go to benefit the people you name on your policy as your beneficiaries. Lets say you took out a big private student loan for college and your parents co-signed on the loan. You might not want them to be left with that debt if anything happens to you. With a life insurance policy (assuming you name them the beneficiary), they would get the death benefit and could use that money to pay off the loan. Thats just one example, though. Your death benefit could go to anyone you want. You just need to name them as your beneficiary. You should also know that there are two main types of life insurance:

  1. Term life insurance: These policies are much cheaper than the other type of life insurance. Theyre called term policies because they expire after their term is up. You might get a term policy for 30 years, for example. At the end of the 30 years, your policy will expire, meaning you dont get anything if you outlive the policy term. But term life policies give you decades of coverage for a pretty small amount of money.

  2. Whole life insurance: Whole life insurance policies last your lifetime, but they cost more. As an added benefit, whole life insurance comes with a cash value component, which basically gives you a way to invest some of what you pay for your premiums (the amount you pay for the policy) over the years.You can learn more about the difference between term & whole life insurance here. Clearly, youve got options when it comes to life insurance. But is now the right time to buy a policy? A big piece of the puzzle is understanding how much it will cost.

How much is life insurance for a 20-year-old? Life insurance costs pretty much the same amount through your 20s. You can see our chart of average term life insurance rates by age to get a good idea of what youll pay. Pulling from those average rates, heres a quick look at the average life insurance cost for a 20-year-old male alongside life insurance for a 20-year-old female, compared against some other, similarly aged individuals. All of these hypothetical people bought a 20-year term life insurance policy. Clearly, the average cost of life insurance for a 20-year-old isnt too pricey, hovering somewhere in the $15 to $30 dollar range. But you might be wondering why the average cost of insurance for a 20-year-old male differs from the rates for females. Simple: life insurance companies know that women tend to live longer, as data from the World Health Organization (WHO) shows.

What is a good age to get life insurance? You might have noticed that weve mostly talked about term life insurance policies. And since traditionally, term policies dont extend beyond 30 or 40 years, you might be wondering whats up. Why would you buy a policy that will almost definitely expire during your lifetime? The answer is twofold. For starters, term policies are so much cheaper than whole policies that theyre usually a better fit for people in their 20s. By the time your policy expires, youll probably be in a much better position to either get a new term policy or get a whole life insurance policy. The second part of the reason you might want term coverage now is that some insurance providers let you convert your term policy into a whole policy instead of letting it expire. By buying life insurance while youre young and healthy, you might be able to score a whole policy for a much cheaper price. That said, the right time to buy a life insurance policy depends on your unique goals and financial situation. As you can see from the table above, insurance might actually get cheaper as you get closer to your mid-20s. Still, though, because life is unpredictable, you might not want to wait to buy coverage. If you have a significant amount of debt or just want to make sure your loved ones get left with a nice benefit when you pass away you might want to buy a policy now. At the end of the day, most experts, including the ones at Investopedia, agree that buying life insurance when youre younger is generally your best bet. While theres no precise age when its wisest to get your coverage in place, it definitely makes sense to start thinking about life insurance in your 20s. Beyond that, the right type of policy depends on your situation, too. If you can afford a whole policy, you can lock in the low rate youll get for buying at a young age now. But if you need to choose term coverage, you might be wondering if you should get a 15, 20, 30, or even 40 year term. That depends. If you know your student loans will be paid off in 20 years, for example, a 20 year policy might be enough. Ultimately, a lot goes into finding the best life insurance for any 20-year-old. We can help. Here at Sproutt, we care about connecting people to the best life insurance based on their unique wants and needs. We also prioritize helping you find coverage that rewards you (i.e., costs less) because you lead a healthy lifestyle. So if youre looking for the best life insurance for a 20-year-old, dont hesitate to contact us.

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