It's easy to write off life insurance when you're young and just out of college. It's an extra expense during a time when your income is likely to be the lowest, and you're probably not going to need it for a very long time, so why not wait? Actually, there are some very good reasons why you may want to consider purchasing life insurance now. Take a look at some of the reasons why you should make life insurance a priority now instead of waiting until you're older.
Lock In a Low Rate
The reasons why you may not be considering life insurance—you're young and healthy and won't need it for a while—are actually good reasons to purchase life insurance now. Insurers calculate your premiums based on how likely they think they are to have to pay out on it anytime soon. Even if you're just as healthy at 35 or 45 as you are now at 25, your risk factors are higher the more you age, and your premiums will reflect that.
You'll get the lowest rates if you choose term life insurance. Term life insurance guarantees you insurance for a given time period—the most common term is 20 years. The idea is to cover your beneficiaries during the time that you expect to be most financially vulnerable. If you're on track to having significant savings or investment dividends in 20 years, you may not be as worried about life insurance by the time you reach retirement age.
If you're concerned that you may still leave vulnerable beneficiaries at the end of a life insurance coverage term and that you may also have difficulty getting affordable life insurance at that age, you can opt for a whole life policy instead. These policies are meant to provide coverage indefinitely—for your whole life, just as the name suggests. You'll pay more for the policy than for a term life insurance policy—though you'll still get a better rate if you buy when you're young and healthy—but your policy will accumulate a cash value as well as provide insurance coverage, which can be a helpful feature.
Take Care of Your Loved Ones
If you're single and don't have children, you may think that the main purpose of life insurance—to provide funds for your beneficiaries—doesn't apply to you. However, it's not just children or spouses that might need financial coverage if you unexpectedly died young. There is a rising trend of adult children who find themselves in the position of helping out their parents financially. Americans, regardless of generation, spend an average of $12,000 a year to financially assist their parents. Some 20-somethings even find themselves helping out their aging grandparents if their own parents are unable to do so.
Consider your relationship with your own parents or older relatives. Are the seniors in your life financially secure? Do they have savings that will see them through a major illness? Have you been helping your parents or grandparents financially, or do you expect to do so in the future? Purchasing life insurance now can help protect your older relatives who may depend on you in order to get by.
Another thing to consider is whether or not you might leave your loved ones with new debt to deal with if you passed away unexpectedly. Do you have student loans that your parents cosigned for? Are you making payments on a car or home that you got with an assist from an older relative's established credit? If something were to happen to you, your parent or relative would be stuck with that debt. Purchasing life insurance can protect the people that helped you from being saddled with that debt burden in the event that you suffer a fatal accident or unexpected illness.
Researching and buying life insurance means considering the possibility of an untimely death, which is not a fun subject to think about. However, it is an important responsibility for adults of any age. If a hard look at your circumstances tells you that you could benefit from life insurance now, contact an insurance broker in your area to start researching your options.