There is a common myth that young adults don’t need life insurance.
In some cases, that could be an awful mistake. Life insurance is one of the most important purchases that you’ll ever make for your loved ones. It’s one of the few ways that you can ensure that your family members have the money that they need if something tragic were to happen to you. What about teenagers and young adults? Should you consider buying life insurance if you’re still in your teens or you’re in college?
There are millions and millions of teenagers and young adults that should invest in a life insurance policy. The problem is that the vast majority of young people will never buy life insurance. In fact, a study completed by Limra, an insurance research and consulting firm found that only 11% of adults between the ages of 18 to 34 said that they are very likely to buy an insurance plan. The shocking thing is the age gap of the study, and the fact that the number is still that low. Imagine if you lowered the ages to 18 – 25, the numbers would be shockingly small.
The answer isn’t simple. There are several factors that you’ll need to consider when you’re trying to decide if you should purchase insurance protection. While buying life insurance can be a confusing process, especially for a young person, it might be easier than you think. Before you automatically assume that you don’t need life insurance because of your age, there are a couple of questions that you should ask yourself.
What Should Be Left With Debts?
The main purpose of life insurance is to ensure that your loved ones will have the money that they need to pay off any bills that they would be responsible for if something tragic were to happen to you. For most applicants, their mortgage is the largest bill that their family will be left with, but as an 18-year-old, you probably don’t have a mortgage loan (but you might). For most young adults a policy that just covers their debts and any burial/final expenses will set their loved ones up well financially.
Do I Have Private Student Loans?
Private student loans are one of the biggest reasons that young adults should have a life insurance plan. If you’re in college or about to go to college, you could end up with some massive student loans. Instead of a large mortgage, most young adults have student loans, which can be drastically large than an average mortgage. If something tragic were to happen to you, your family would be responsible for paying off all of those bills and other debts.
If you have student loans, or you’re about to have student loans, then it’s a good idea to have a life insurance policy. You should purchase a plan that is the size of your student loans.
Should I Invest Now?
Another factor to consider is the cost of life insurance now versus what it’s going to be later. If you purchase life insurance when you’re 18, it’s going to be drastically cheaper now, than if you wait unitl your 30s or 40s. Sure, you may not need a life insurance plan right now, but you are going to in several years. Why not go ahead and purchase one of those plans today and save yourself some money every month.
Life Insurance as an 18-Year-Old
If you’re an 18-year-old looking for life insurance, or you’re the parent of a young adult that wants to get insurance protection, there are a couple of options that you should consider. The most popular option is to add a child term life rider onto a life insurance plan from a parent. These riders will let you get around $10,000 worth of coverage onto the plan that you or your parent already owns.
Another option is a whole life insurance plan. Because the plan is for a young applicant, the premiums for a whole life insurance policy are going to be drastically lower than for a 30-year-old. As you can guess from the name, whole life insurance plans will never expire. As an 18-year-old, you can get a whole life insurance plan for around $150 a year.
The last option is to buy a term insurance plan. Getting a 30-year-term insurance policy is a great way to get the coverage that you need at an affordable price. Term insurance plans are going to be the cheapest way to get life insurance coverage.
Assuming that you don’t need life insurance because you’re young is a terrible mistake. Nobody wants to think about anything tragic happening to them, but life insurance is the best way to ensure that your family and loved ones will have the money that they need, regardless of what happens.