Life Insurance for Young Adults: Which Plan is Best for You?

Happy young Asian couple embracing in the park with life insurance

Young adults may benefit from a good life insurance policy for many different reasons. So, if you’re young, it’s worthwhile to look into it. Keep reading to find out what those reasons are and how you can find the best plan for you.

What Does “Life Insurance For Young Adults” Mean?

Contrary to what you might think, there is no separate life insurance policy designed for younger people. Instead, this term refers to the kind of life insurance that best suits a younger person’s needs.

For example, an older person may already be retired and looking at life insurance as a way of providing for his children. But younger people may be looking at life insurance as a way to jumpstart their retirement plans or safeguard themselves if they develop a dangerous health condition.

Benefits of Getting Life Insurance When You’re Young

There are several benefits to getting life insurance at a young age. The first is purely financial: life insurance tends to be much more affordable when you are younger. With the right insurance plan, you can effectively lock a reasonable rate in for years (potentially even decades) well before you develop any sickness or chronic illness that would make your coverage more expensive.

Another benefit is one that most young people never consider: you can effectively use your life insurance as a way to invest in your future. By choosing a permanent life policy that does not expire the way that term life insurance policies expire, you can build up a death benefit over time that you can access and use as needed. While you should diversify investments to more safely retire, it’s great to have a retirement benefit and life insurance policy rolled into one.

Understanding the Two Kinds of Life Insurance

The first kind is term life insurance. As the name implies, this is life insurance that you take out for a certain period of time. Typical terms for this kind of insurance are 10, 15, 20, and 30-year terms. Some like this kind of life insurance because it tends to be more affordable (more on this later), but keep in mind that you will need to take out a new life insurance policy if you want to remain covered when the initial term expires.

The second kind is whole life insurance. This kind of coverage tends to be more expensive because it does not actually expire as term life insurance does. On top of that, this is the kind of life insurance we mentioned earlier that builds cash value over time.

An African American running on the top of the bridge while enjoying a life insurance plan

Benefits of Term Life Insurance

We’ve already mentioned the biggest benefit of term life insurance: it is a cheaper option, especially for young adults compared to whole life insurance. This may be a good life insurance choice for those who are still growing their income.

Another benefit of term life insurance is that you can use it to help make plans for the future. For example, someone who intends to start a family may want to take out a 20-year term so they know their child will be financially protected until they are an adult.

Finally, the death payout for term life insurance is typically higher than that of whole life insurance. And in some cases, you can convert your term coverage to whole life insurance coverage.

youngasian couple looking for life insurance in their phone and laptop

Drawbacks of Term Life Insurance

Term life insurance is a great option, but there are some drawbacks you should be aware of.  First, there’s the fact that it’s limited by the term you choose. On top of that, if you want to get coverage again after the first term ends, you may no longer qualify because health complications may effectively disqualify you from coverage or drive the premiums up.

Even if you stay in excellent health, you can be guaranteed that premiums will be higher every time you take out a new policy (though you can mitigate this by taking out lengthy policies). This is one of the reasons that so many millennials are seeking lengthy life insurance due to fears of COVID-19.

Finally, unlike whole life insurance, term life insurance does not build up any cash value.

Keep in mind that these drawbacks may not apply to your particular, and the benefits of having the right life insurance outweigh the disadvantages.

Benefits of Whole Life Insurance

The first is the death benefit for this insurance builds a cash value that you can use in a variety of ways later on. So this is a life insurance policy that may double as a retirement benefit when you get older.

The second benefit is that the premium amount is fixed. This is a type of insurance coverage you can keep for your entire life without worrying about the premiums jumping up.

Drawbacks of Whole Life Insurance

The first is that the death benefit is smaller for whole life insurance than a term policy. So while premiums may be higher for term life insurance, that form of coverage may provide a bigger payout for your family.

The second drawback is that it is more expensive than term life insurance. While the premium will stay the same for whole life insurance, it is overall a more expensive form of coverage than term life insurance.

However, it’s important to remember that even with higher cost, a whole life insurance policy could be well worth it for your needs.

Get the Best Life Insurance For Young Adults Today

Now you know why life insurance is so important for young adults and how to choose the right plan. But do you know who makes it easy to get the best life insurance today?

At InsureOne, we are committed to protecting your family with great life insurance coverage. You can request a quote online by visiting our site. You can also visit us at your nearest office or give us a call at 800-836-2240.