5 Reasons Why Buying Life Insurance in Your Twenties is a Good Idea

by TJ Porter | November 01, 2018

When you’re in your twenties, it’s easy to feel invincible. You’re young and healthy, so why would you need life insurance? Even if you don’t think you need it right

When you’re in your twenties, it’s easy to feel invincible. You’re young and healthy, so why would you need life insurance?

Even if you don’t think you need it right now, you might be surprised at the number of reasons why buying life insurance in your twenties is a good idea.

1. Lock in a Lower Rate

One of the biggest influencers of the cost of life insurance is your age. To put it bluntly, the more likely you are to die, the more you have to pay for insurance.

The good news is that most 20-somethings are healthy and have long lives ahead of them. In the future you may be starting a family, buying a home, and eventually retiring. That also means that you can benefit from buying life insurance at a young age. By buying insurance in your twenties, you’ll pay less each month than if you’d pushed it off until you were older.

2. You Have Student Loan Debt

Most people graduating college these days have student loan debt. Student Loan Hero reports that as of 2012, more than 70% of graduates had some amount of student loan debt. In 2017, the average student loan debt for graduating students was $39,400, an increase of 6% from the previous year.

If your parents cosigned your student loans, they would be responsible for paying them off should you pass away. Getting life insurance to cover your student loan debt can help remove that burden from them should the worst happen to you.

Graduate students are particularly encouraged to get life insurance. You’re at the age where you might have dependents but likely won’t get coverage through work. You almost certainly have some sort of debt that will need to be paid somehow should you pass away.

3. People Depend on You

Speaking of dependents, they’re one of the most obvious reasons you should get life insurance. If you have a partner or children who will need someone to provide for them, you need to get life insurance.

If you pass away, there will be no one earning money to pay for the support of your partner or children. A life insurance payout can cover their basic needs while they grieve and figure out a new way to pay for expenses and support their lifestyle.

The next step is knowing how much life insurance you need. For example, if you own your own home, you’ll want enough insurance to cover a good chunk of the mortgage to ensure that your dependents have somewhere to live. A licensed life insurance agent or financial planner can help you figure that out.

4. You’re a Job Hopper

Young people have a reputation for being serial job hoppers. It’s not an unfounded reputation either. 87% of people ages 25 to 29 had an average length of employment at the same job of fewer than five years. By contrast, only 66% of people ages 40 to 48 had an average length of employment of fewer than five years.

Job hopping is a great way to get out of a job you don’t like or to increase your pay. However, there’s one big problem with job hopping. When you leave your job, you lose your previous employer’s benefits and likely won’t get benefits again until you find a new job. Many employers offer some form of group life insurance benefit, and while it might not be sufficient for all your needs, it’s a nice extra that you don’t want to lose while hunting for a new job.

Letting your life insurance lapse while you’re out of work is extra risky. While you’re looking for a new job you’ll likely be spending down your savings, and if you pass away, your dependents won’t have the financial protection of your now depleted emergency fund or a life insurance payout.

5. You Don’t Have Much Money Saved

People who have a lot of money in the bank or in investments might not need life insurance. Instead, they can self-insure, giving their dependents their savings and investments to rely on should they pass away. Having a $500,000 life insurance policy probably isn’t necessary if you have millions in the bank.

This isn’t the case for most 20-somethings. In fact, in 2016, more than half of households led by someone between 25 and 29 had a net worth less than $10,000. You need a lot more than that to be able to self-insure.

The Best Life Insurance in Your Twenties

While we can’t say it’s the best choice for everyone, most 20-somethings would be best served by term life insurance. For a low monthly payment, you can be protected for decades. The best part is that you lock in your rate when you buy, which is good if you’re young.

It’s true that many 20-somethings can get away with not having life insurance, but that’s no reason to ignore the idea entirely. A lot of young people are in situations where they really should have some level of life insurance.

Think about whether any of the situations we’ve provided apply to you, or if you can think of any other reason that life insurance might be a good idea. There’s no reason you shouldn’t at least get a quote. You might be surprised by how reasonable the cost is.