The Benefits Of Buying Life Insurance At A Young Age

By Briauna Benson on September 11, 2023

Often times when it comes to financial investment, young people put off or don’t think about life insurance. There’s a benefit to buying life insurance at a young age. It’s understandable why young people put it off because the limited knowledge surrounding the subject renders one to think it’s unnecessary and not fully understand the benefits. People must understand that when you put off buying life insurance, the more expensive it will be to purchase and not getting any at all can put your family at risk. If one isn’t married or has children, it’s easy for life insurance to be seen as useless but, here are the benefits of buying life insurance at a young age.

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Greater and cheaper rates

The sooner you get life insurance the cheaper it’ll be, so buying life insurance at a young age means the more options will be available, and there’ll be higher chances for approval. Companies offering life insurance provide cheaper premiums to young people who are healthy with no pre-existing conditions. The qualifications for life insurance are highly dependent on health and age. Buying life insurance at a young age makes it easier to afford life insurance before any health conditions one can develop later in life.

Pay off debts

Buying life insurance at a young age means any beneficiary can pay off any debts should one die prematurely. A lot of millennials and Gen Z do and will have some form of non-mortgage debt, the average millennial owes $117,000 in debt. Your life insurance death benefit can be assigned to a co-signer of your loan, and they could use that money to pay off the debt. 

When considering life insurance there are different policies that would be more suitable for different people. With assistance from a financial advisor or a licensed life insurance agent, one can make shopping for the best policy much easier. There are different types of life insurance policies that fall under two categories, term and permanent. Understanding the difference between the two is important.

Term life insurance 

Term life insurance provides coverage for a certain period of time, typically 10 to 30 years. It’s usually cheaper than permanent insurance but, it lacks a cash value component. The larger death benefit that normally comes with term life insurance may make it more appealing for people buying life insurance at a young age, especially if they’re new parents. Many financial planners will encourage people investing in term life insurance to invest the saved money by not purchasing permanent life insurance at a higher cost. If the policyholder outlives the term then the beneficiaries would not receive death benefits after the insured’s passing unless they have specialized riders, also known as an endorsement. An insurance rider is an add-on that provides additional coverage and extends the terms, conditions, and may allow the holder to use the money before death. However, the rider may increase premiums. Some riders may be worth the investment while others may not have any benefit. With all the different options it’s important to research to find what best fits one’s current situation.

Permanent life insurance 

Permanent life insurance may benefit people buying life insurance at a young age as a long-term financial planning strategy. As long as premiums are paid, there’s no expiration date and cash value grows. Cash value could provide an option for one to borrow from but it does diminish the death benefit if whatever is taken is not repaid. The cash value portion grows free of tax and if one chooses to cancel the policy, the cash value amount might still be given. This option is generally more expensive and some permanent insurance may be subject to index changes. For example, High fees can chip into the cash value and cash value withdrawals can be taxed if they contain money from investment gains.

It’s important to keep in mind that different plans will suit different people. However, no matter what, the benefits of buying life insurance at a young age could be one of the greatest self-investments one could have. Investing early in your life will cost less in the long run and as one gets older, in turn, they’ll understand why it is an important part of a retirement plan.

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