A Buyer’s Guide to Life Insurance for Young Adults, Adults over 50, and Everyone in Between

Posted by Matt Simon on Mar 23, 2018

Life Insurance for Young Adults is Just as Important As It is for Retirees — Here’s Why You Should Be Covered

As unpredictable as life is, the one thing you can control is how you protect your assets. Most people either have life insurance or they know they need it. If you fall into the latter, do you know what type of policy you need and how much? There are life insurance policies for young adults, middle-aged adults, and retirees.

Everyone’s situation is going to be different, but everyone is eventually going to die. What’s important for you is to make sure you’re thinking about how your death will affect the people around you, and what steps you need to be taking to keep things protected.

Commercial life insurance is crucial to ensuring that the people in your life and you cover the things you own in the event of your death. The best way to get life insurance is to fully understand what goes into the different types of policies so you can know you’re getting exactly what you need.

Don’t get caught up in the myth that you don’t need life insurance yet either. It’s something that everyone needs. Life is unpredictable, and being prepared is always the better option. The benefits that come with a life insurance policy that can give you an advantage no matter how old you are.

What Are the Benefits of a Life Insurance Policy?

Your life insurance policy needs to match the situation you’re currently in. It doesn’t matter if you’re 25 or 55, a life insurance policy is still going to benefit you and the people closest to you.

Life insurance for young adults can help cover marriage, your first home, and student loans. Your policy can manage the new responsibilities and expenses you’ll face in this stage of life. You won’t need as much coverage as you will when you’re older, but a basic plan is a great place to start.

Your student loans are the first major debt you’ll likely take on, and if you pass suddenly, that responsibility doesn’t just go away. With a life insurance policy, you can make sure that your financial responsibilities won’t become a burden to another person in your life. Even if you’re single, these expenses still need to be considered. In the example of student loans, whoever your cosigner is will likely take on your debt in the event of your death, which could put them in a tough spot.

For adults, life insurance becomes more significant. At this point in your life you have more financial assets to consider, and potentially a family that would have to take on significant financial responsibilities that they may be unprepared for. If you’re the head of the household, your family’s risk is even higher because they’ll be losing a large source of income.

You’re also going to be looking for more coverage. Your mortgage and your kids’ education are two things that will likely drive up the amount of coverage you need. However, if these things are already paid off, you won’t need as much.

As you get older and approach retirement, it’s important to remember that your employer’s life insurance policy will expire once you’re no longer an employee, which will leave you at risk.

Once you are retired, this is when life insurance becomes the most prevalent. You may have had life insurance as part of your benefits package at your job, but once you’re no longer working, you can’t just let this coverage fall off your radar. You’ll need to get a new policy and update your beneficiaries if need be.

You may also want to look into a final expense policy. It covers more than just funeral and burial costs, like debt and ongoing monthly expenses. This policy can also cover probate and other estate administration costs and medical expenses not already covered by health insurance.

An Overview of the Different Types of Life Insurance Plans

Life insurance for young adults differs from a policy for older, retired adults because you’ll need less coverage, and your amount of risk isn’t as high. For young adults, a term life insurance policy is usually the better choice because it’s designed for premature death. Term life insurance is coverage that is in effect for a set period time; typically anywhere from 5 to 30 years.

This policy is a more affordable option, and you choose the period that it’s in effect when you purchase your policy. The best way to decide your time period is to plan the end date for when your family no longer needs it anymore, i.e., your kids have moved out, you've paid off your house, etc.

If you’re looking for a policy without a hard end date, whole life insurance is another type of policy you can obtain, and it covers you throughout the entirety of your life. This option is for older adults who are looking for proper death benefits for their loved ones. These policies are permanent, and the rates never increase.

Finally, there is a blend of the two. This mix of term and whole life insurance is designed to give you the best of both worlds. A blended policy brings together the advantages of each and allows you to take care of your debts and the people you love all in one policy.

Do Young Adults Need Life Insurance?

As you start to take on the “real world” and more responsibilities, insurance is one of the things that young adults will need to start looking for, and life insurance shouldn’t be ignored. At this point in life, you’re likely paying bills, managing student loan debt, and moving from an apartment to a house.  While these are all time-consuming and you're working daily to figure things out, you still need to consider what would be left behind if you’re loved ones face your premature death.

Life insurance is affordable; a term life insurance policy could potentially cost less than $50 a month with the amount and duration of coverage you choose. It’s even possible to get coverage online — you aren’t even required to speak to anyone on the phone, and you can get a quote and the coverage you need in minutes.

It’s easier than ever to get life insurance coverage, so you can’t use the excuse that you’re too busy. Even if you’re single and don’t have a family or business to think about, the best time to get a life insurance policy is when you’re younger because it can cost less that it would years later when you're older.

Understand Your Policy: What Factors Affect Life Insurance Premiums?

As you age, your life insurance policy impacts several major events that people may experience. From marriage to buying a home to death, your life insurance policy can ensure that no matter how things change, you’ll be able to have confidence that no one will succumb to the burden of your financial responsibilities after your passing.

When you get married, you’re also giving the responsibility of your death to your partner. If you were to pass suddenly, would they be able to handle the costs of a funeral? Life insurance makes it so that you don’t even have to have this concern.

Events like this impact your coverage because you may need to add more to be sure that you have the right death benefit for your loved ones. As people move in and out of your life, it might also be important to change the beneficiary so the right person will receive a payout after your passing.

The further you move through life, the more you’ll have to consider in regards to financial responsibilities. If you already have coverage through your employer, that's great, but you still need to consider the potential pitfalls.  For example, if the only life insurance coverage you have is provided by your employer, and you work there for 20 years, then decide to quit, retire or find another job, that life insurance goes away.  You now have several potential challenges:

  • You're 20 years older, so at the very least, obtaining life insurance coverage on your own is going to be more expensive
  • If your health condition changed over that 20-year period of time (perhaps you had a battle with cancer, an open hear surgery, etc.), you might not even be in a position to qualify for your own life insurance policy

The reality is, even if you have life insurance provided through your employer, you really should consider supplementing this with your own life insurance policy that you own, and can control the amount of coverage you want in addition to the time period you want and need the coverage to be in effect.

Life insurance for young adults is a good policy to have under your belt as your transition into the next phase of your life. At a younger age, things change more frequently, and life insurance will make sure you’re protected whether you’re paying rent or a mortgage. Once you’re older, you’ll be able to make choices with confidence knowing you've protected your finances in the event of your death. What’s most important to remember is that you’ll be protecting your loved ones as much as yourself. Looking out for them is already your top priority, so eliminate worries about the future with an adequate life insurance policy.

Category: Life Insurance (1)