Life insurance for young adults

Snagging a competitive rate is just one of the many reasons to purchase life insurance coverage in your 20s. If someone relies on your income, you have debt, or you are starting a family, having this type of financial protection can go a long way.

Jennifer Pan

Jennifer Pan

Published October 24, 2019

KEY TAKEAWAYS

  • Life insurance gets more expensive as you age, so buying a policy now helps you lock in a good rate

  • If you financially support someone, have student loans or other debt, or are planning on having kids soon, life insurance is a good idea

  • Term life insurance is an affordable and flexible option for most people under the age of 30

If you’re under 30, single, and don’t have children, life insurance probably isn’t the first thing on your mind. While life insurance is an important part of a comprehensive financial plan for people with dependents, purchasing a policy means paying either monthly or annual premiums. For many young adults who are just starting their careers, those premiums can often seem like an unnecessary expense.

So how do you determine whether the cost of life insurance is worth it if you’re under 30? There are a few simple guidelines that can help you decide whether it makes sense for you to buy life insurance right now.

In this article:

How much does life insurance cost?

Life insurance coverage gets significantly more expensive with age, so being young and healthy is a good opportunity to lock in a cheap rate for decades. Life insurance rates increase 8 to 10% on average for each year that you delay applying. That means that a healthy woman who takes out a life insurance policy at age 20 could pay as little as $14.52 monthly for the same policy that would cost a 60-year-old $108.05 each month in premiums.

Below is a cost comparison over time for a 20-year, $250,000 life insurance policy for a healthy woman in New York, starting at age 20.

Age2030405060
Est. Premium (Monthly)$14.52$15.28$21.26$42.18$108.05
Est. Total Cost$3,484.80$3,667.20$5,102.40$10,123.20$25,932.00

Over the life of this policy, a 20-year-old woman would pay approximately $1,600 more if she waited until she was 40 to buy the same policy, and nearly $22,500 more if she waited until she was 60.

However, while it’s cheaper to buy life insurance when you’re young, keep in mind that your age isn’t the only factor that determines the cost of your policy. The following will affect your premiums:

  • Chronic illnesses
  • Marijuana or other drug use
  • Smoking or nicotine use (including vaping)
  • Risky hobbies like skydiving

Here’s how to make sure you get the best insurance rates based on your health history.

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Why you might need life insurance now

Life insurance provides a financial cushion for your loved ones in the event of your death. If any of these circumstances apply to you, it makes sense for you to consider buying life insurance when you’re in your 20s:

Someone relies on you for financial support

If there’s someone who currently relies on your income to make ends meet, you’ll want to make sure they’ll be able to stay afloat financially if you unexpectedly pass away. That person could be a partner or spouse, a parent, sibling, or other relative, or even a friend or business partner.

Since the death benefit from life insurance is tax-free and can be used for anything—including funeral expenses, paying off debt, or taking time off work—life insurance protects the beneficiary of your policy from financial hardship that could result from your death. You can name anyone (or more than one person) as your beneficiary, and you can easily change or update that beneficiary at any point during the length of your plan.

You have private student loans or other debt

While federal student loans are typically forgiven if the borrower dies, most private loans aren’t. That means that a parent or anyone else who co-signed your student loans could be left on the hook for your debt when you die. (The same goes for any other loans you might have taken out with a co-signer, such as a small business loan.) A life insurance plan that names the co-signer of your loans as your beneficiary could help ease any financial burden that might result from your death.

You’re planning on having kids soon

Many people wait until their children are born to purchase life insurance. But if you know you want kids within the next 5 years, you can lock in a cheaper rate by buying a life insurance policy now. Not only will you be securing financial protection for your future kids, but by saving on premiums, you’ll be freeing up more money for other expenses down the road, such as child care and college.

Term life insurance for young adults

A term life insurance policy is right for most people, especially those under 30. Term life insurance covers you for a set period (known as a term) that usually lasts between 10 and 30 years. When you purchase term life insurance, your rate is set at the time you sign the policy, which is why it’s so advantageous to buy one when you’re younger and healthier.

Generally speaking, you should aim to purchase a life insurance policy that’s worth 10 to 12 times your income and takes into account any debt you owe (plus interest).

You can use this guide to calculate how much life insurance you need.

Who doesn’t need life insurance

Though being young is a good time to lock in a cheap rate on a policy, life insurance doesn’t make sense for every person under 30. You probably don’t need life insurance if you are:

  • A single person without any dependents or debt who isn’t planning on having kids in the future.
  • A low-income earner whose budget simply can’t cover the cost of premiums.
  • Self-insured, or someone who already has enough assets to provide for your family and other dependents in the event of your death.
  • Under the age of 18—life insurance for children is purchased by parents, usually in the form of a rider on an existing policy.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.