Business Case Studies

What It Means to Get Life Insurance in Your 20’s

If you are in your 20’s, you are only getting the hang of adulthood. This is the stage of life that introduces you to independence and gives you the chance to experiment some of your teenage ideas.

One very important thing most people forget about once they land their very first job is the need to invest in a life insurance policy. You must already know that the reason people get insurance policies is to secure the future of the children if the person dies or loses their income due to a chronic illness or accident. Young people, on the contrary, fail to buy life insurance policies for this exact reason.

Buying a life insurance plan while still in your twenties is one of the wisest investments you can make. Think about it – your responsibilities will go up the moment you start a family and the money you have lying around right now might not be there anymore. It becomes extremely difficult to raise the premiums of a life insurance policy with basic needs and the mortgage all needing an allocation. Below are reasons why you should consider getting a life insurance policy while you are still in your 20’s or 30’s:

Health is wealth

Life insurance takes into account your health at the time of signing up for the plan. In your twenties you are less likely to have been diagnosed with a chronic disease or any condition that may impact the cost of the policy negatively. Also, if you have a serious condition or have a risk factor for a health issue, taking life insurance will help ensure the future of your partner is sorted in case something happens. Talk to a lawyer or financial advisor and ask them, “what is term life insurance?” And when is the appropriate time to invest in it?” to help you make a more informed decision.

Some insurance companies award loyalty benefits to long-term clients

To remain relevant and retain their clients, most insurance companies will reward their long-term clients with discounts and deductible reductions. If you can invest in your twenties, you will have accumulated a fortune by the time you are fifty.

It helps you save cash

This is an obvious advantage to anyone who has a nodding acquaintance with life insurance. Instead of just saving the cash in a bank – which would lessen its time value – life insurance can provide an ideal way to contribute the money in investment.

The earlier the less expensive

The sheer number of people in their 50’s and 60’s regretting passing up the opportunity to invest in life insurance at an early age is a good reason to insist on this point. In your twenties and thirties, you have the time, energy, and money to save and invest. On top of that, you are likely to get cheaper premiums due to your health stability. This, whether or not you experience a sudden health crisis in the near future, usually doesn’t change until your policy expires.

To break it down better, insurance companies need to make profit and the only way they do it is by collecting premiums. Upon death of a policyholder, they incur losses in death benefits. Since older individuals are likely to die sooner, the premiums individuals in their 60s and 70s are required to pay are relatively high as the company seeks to balance the math. Other people with higher mortality risks such as heavy drinkers and smokers and people with chronic diseases like cancer patients fall under the same bracket.

Life insurance can help you create an investment vehicle

There are two types of life insurance: permanent life insurance and term life insurance. Just like whole life insurance, permanent insurance has cash value, meaning as you pay the premiums, a percentage of it goes to your account. The cash is not taxed until it is withdrawn and you can withdraw it anytime you want and end your policy then.

If you give your money enough time to grow, it can accumulate to a significant amount, which you will find useful in retirement.

Getting life insurance in your twenties and thirties is the perfect way to get the money to accumulate into a substantial amount while keeping it safe from the taxman.

To protect your family from debt

While some debts such as private credit card debt or federally-funded student loans may be written off when you die, mortgage, car loans, and private student loans must be paid. Your spouse or cosigner will carry on with the payment without your income, which can be pretty unfair to say the least.

The wisest thing to do if you have cosigned assets is to buy life insurance to ensure you are able to pay off loans even after you die.

Life insurance will cover your funeral expenses

Your funeral is understandably the last thing you want to be reminded about, let alone how much it will set you back. Funerals can be costly, and most deaths do not knock when they come, so this is something that is very likely to shock your family.

If you don’t life insurance, your close family members will need to raise the cash, which can be upwards of 8,000 dollars, according to statistics. This will also happen at the same time they are mourning your death, which can worsen an already messed-up situation.

It will help you protect your business

If you are in your 20s or 30s and have already set up a business for some extra earnings, life insurance should be considered requisite if you are to protect your venture in the event you die before finalizing deals.

Imagine the confusion you will leave your family in if you flip real estate then die in the middle of a flip, or perhaps you have a business debt or your business has an ongoing expense to cover that you are sure your family cannot handle. Buying life insurance ensures you leave behind enough money behind for your loved ones to continue your business exactly how you have done it.