Life insurance is often associated with key milestones such as getting married, becoming a parent, or starting a business. In fact, some young adults may delay getting life insurance until they marry, even though getting insurance at a younger age has great advantages. You may already know that securing life insurance when you’re young and healthy may mean lower premiums, but did you know that getting insured early also allows permanent life insurance policies longer to build cash value? Keep reading to learn more about the reasons to get life insurance as a young adult.
Life insurance is a contract between you – the policyholder – and a life insurance company. You’ll pay a certain amount of money through monthly or annual premiums in exchange for a death benefit that loved ones can receive if you pass away.
Permanent life insurance plans, such as whole life and universal life insurance, last your entire lifetime and grants a payout to your beneficiaries when you pass away, no matter how long you live. Meanwhile, term life insurance offers coverage for a fixed period, such as 20 or 30 years, before it expires. Both types of insurance have their own benefits. For instance, term life insurance typically has lower premiums, but permanent life insurance usually has a growing cash value that you can borrow against.1
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Here are some key benefits of getting life insurance as a young adult:
Life insurance policyholders typically pay the same premiums throughout the life of the policy, but age has a big impact on the rates you qualify for. Young adults who are healthier and have a lower risk of medical conditions are more likely to secure lower premiums. And once you’ve obtained a policy, you can typically continue paying the same premium for decades. On the other hand, an older individual who purchases life insurance may pay much higher premiums for the same amount of coverage.
Whole life insurance usually has a cash value component that grows as the policy ages. One of the living benefits of this policy is that you can borrow against the cash value to cover expenses, whether you need to repair your home or pay medical bills. However, it can take years before the cash value grows to a point where it can be useful. Getting a policy when you’re younger means that it has more time to accumulate cash value for situations where you really need it.2
A life insurance plan can give you added peace of mind knowing your loved ones can be financially protected in your absence. If you have a partner, children, or retired parents, life insurance can help provide them with a degree of financial security. Additionally, you may have large debts, such as student loan debt, that a partner or other loved one may have to pay off if you pass away. Getting a life insurance policy can enable your beneficiary to pay off outstanding debts and remain financially stable in case the unexpected happens.3
Young adults have a variety of life insurance policies to choose from, including:
Term life insurance offers coverage for a fixed period that typically ranges from 10 to 30 years. After your plan expires, you may be able to extend your coverage, convert your plan to permanent life insurance, or get a new policy.
As the name suggests, this type of policy offers coverage for the policyholder’s whole life. It has a guaranteed death benefit that is paid out to the beneficiary once you’ve passed away. The guaranteed death benefit makes whole life insurance more expensive, but it typically has a flexible cash value that enables policyholders to get some living benefits out of the policy.
A universal life insurance is a permanent plan that comes with more flexibility than other options. This type of policy has a guaranteed death benefit and cash value, but unlike whole life, it offers a flexible premium plan. You may be able to pay lower premiums when you need to adjust your budget, and higher premiums when you want to increase coverage.
Final expense insurance can help you ensure that your end-of-life costs are taken care of after you pass away. With this type of permanent policy, your loved ones can use the death benefit payout to help cover any pending legal fees, medical bills, and funeral expenses.
Generally, life insurance costs are based on the applicant’s health and age, among other factors. If you have a health condition, you may have to pay higher premiums or get denied coverage altogether. Luckily, guaranteed-issue life insurance allows you to get coverage without having to answer medical questions or take a medical exam.
Since many young adults seeking life insurance are in good health, premiums are typically available that meet most budgets. The average premiums for a 20-year term life policy that offers $500,000 coverage are $26.69 and $20.89 per month for a 25-year-old man and woman, respectively. Those premiums rise to $30.15 and $25.43 per month for a 35-year-old man and woman.4
It’s wise to consider factors like your income, your debts, and your dependents’ needs when deciding how much life insurance you need. You can get a quote or try Aflac’s online calculator to help you get an idea of how much coverage is right for you.
You should also consider how your financial situation may change in the future. For instance, you may get married and have children. You don’t need to factor in every possible goal when determining how much coverage you need, but it’s a good idea to be mindful of what your needs may be in the long term.
Here are the steps young adults can take to get life insurance coverage:
1. Figure out your coverage needs and choose a policy type: Start by calculating how much coverage you should get based on the factors mentioned above. Then, review options like term life, whole life, and universal life insurance to decide on the best type of plan for you.
2. Compare life insurance companies and quotes: Start researching different life insurance companies and compare the policy options offered by each one. You can also request quotes from a few companies to compare rates.
3. Fill out an application: Once you’ve chosen a life insurance policy and company, you can fill out an application form and provide any necessary documents. The insurer will get in touch with you regarding a medical exam if necessary. After you take the medical exam, you’ll just need to wait for approval.
4. Receive coverage: If approved for life insurance, you can start paying premiums and have the coverage you need to help protect your loved ones.
Aflac offers term and whole life insurance policies for young adults that may suit your specific needs and provide the coverage you're seeking. Aflac offers guaranteed-issue options for some of our plans, which allows you to skip the medical questions and exam. You can also choose from our riders to supplement your coverage and customize your policy. Start chatting with an Aflac agent today to get a quote and learn more.
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1 Investopedia - Getting Life Insurance in Your 20s Pays Off. Updated July 04, 2022. https://www.investopedia.com/articles/personal-finance/100615/getting-life-insurance-your-20s-pays.asp. Accessed April 4, 2023.
2 Bankrate - Life Insurance for Young Adults. Updated Mar 02, 2023. https://www.bankrate.com/insurance/life-insurance/young-adults/ Accessed April 4, 2023.
3 Forbes - Why You Should Opt for Life Insurance at a Young Age. Updated October 11, 2021. https://www.forbes.com/advisor/in/life-insurance/why-you-should-opt-for-life-insurance-at-a-young-age/. Accessed April 4, 2023.
4 Finder - Average life insurance rates 2023. Updated March 2, 2023. https://www.finder.com/life-insurance/average-cost-of-life-insurance. Accessed April 4, 2023.
Life – 68000 Series - In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. Term/Whole Life – B60000 Series – In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Group Whole Life - Q60000 Series - In Arkansas, Policy Q60100CAR. In Delaware, Policy Q60200M. In Idaho Policy Q60100CID. In Oklahoma, Policy Q60100COK. In Oregon, Policy Q60100COR. In Texas, Policy Q60100CTX. Group Term Life Q60000 Series - In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
The content herein is provided for general informational purposes and is not provided as tax, legal, health or financial advice for any person or for any specific situation. Employers, employees and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac insurance coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage underwritten by American Family Life Assurance Company of New York.
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