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Life Insurance for Young Adults

April 19, 2023
Our goal is to educate and advise on life insurance options, so you can feel confident in making the right choice, whether that’s through Quotacy or somewhere else. To ensure we provide accurate and trustworthy information, our writers follow strict editorial standards.

Not all young adults, those in their 20s and 30s, need life insurance, but many do. In fact, young adults are vastly underinsured. According to a Life Insurance Marketing and Research Association (LIMRA) survey, there are two main reasons for this:  

  1. They assume life insurance costs much more than it does.
  2. They find buying it complicated and daunting.

In this guide, you’ll learn why young adults may need life insurance, the best type of life insurance, and how affordable life insurance for young adults actually is.

Table of Contents

Wondering when you should buy life insurance? The right time depends on individual circumstances. Understand the most important factors at play, as well as how life insurance needs and rates change with age.

Do Young People Need Life Insurance?

A common myth is that life insurance is for “old” people. This couldn’t be further from the truth.

Arguably, life insurance is more consequential for the younger population. How so?

  • When you’re older, finances are often much more stable. 
  • Older post-retirement people don’t have as much debt. 
  • Fewer people rely on retirees financially.

The reality for young adults is this:

  • Many have children, which gets more expensive every year. 
  • They typically have a steady job but are still developing a career.
  • At this stage, they’re just starting to build wealth. Financial security isn’t a guarantee. 

If your sudden death would have a negative financial impact on your loved ones, you need life insurance. 

How to Assess Your Life Insurance Needs and Costs

Your life insurance needs depend on your personal family situation and finances.  

Life insurance doesn’t help grief. It doesn’t prevent death. It won’t speed emotional recovery when a loved one dies. 

What it does is make sure your loved ones are financially secure. It makes sure your family can remain in their home. It gives your loved ones just one less thing to worry about if you die.

To understand what you truly need, let’s explore the following:

  • How does life insurance fit into your long-term plans?
  • What dollar amount does your policy need to cover?
  • How long do you need coverage for?

Policy Type: How Coverage Fits Into Your Long-Term Plans

There are two broad categories of life insurance: term life insurance and permanent life insurance. 

Term Life Insurance

Term life insurance is the most commonly purchased type of life insurance. For young adults, it’s the best option due to its affordability.

  • Term life insurance lasts 10-40 years.
  • Term life insurance coverage amounts range from $50,000 to millions of dollars.
  • Rate is fixed, meaning it won’t increase as you age or if you develop a medical condition.

Term life insurance is budget-friendly, especially for young adults. Your age and health play a huge role in determining the cost of your life insurance policy.

The younger you are, the cheaper your coverage is. The healthier you are, the cheaper your coverage is. Consider the table below.

Monthly Quotes for $250,000 30-Year Term Policy

These monthly quotes are for a Preferred Plus rating, the best risk class you can receive. As a young person, chances are you’re healthy and eligible for the best risk classes.

In general, our health declines as we age. If you wait to apply for life insurance until you’re older and less healthy, you’ll pay more for life insurance.

This is one of the many reasons why buying life insurance as a young adult can be beneficial.

Permanent Life Insurance

Permanent life insurance is a category of policies that last your entire life. Specific permanent products include whole life insurance and universal life insurance.

  • Permanent life insurance is lifelong coverage.
  • Permanent life insurance accumulates cash value you can access via policy loans or withdrawals.
  • Premiums are much higher compared to term life insurance.

Permanent life insurance is also less expensive when you’re younger and healthier. With that said, most young people don’t need it, and it still costs far more than term, no matter what.

Term life insurance is meant to protect your loved ones during their most vulnerable years; building a family, paying off debt, and saving for retirement.

Once you’re in or near retirement, the need for life insurance decreases because:

  • You likely don’t have children relying on you financially.
  • Your debts are paid down.
  • Your savings have accumulated.

Buying an affordable term policy and putting your extra cash into savings and investment accounts will yield more significant financial gains than buying a permanent policy. 

However, if you make a large salary and max out annual retirement contributions, then permanent life insurance may benefit you. But first, consider the tables below.

Monthly Quotes for $250,000 Whole Life Policy
Monthly Quotes for $250,000 Guaranteed Universal Life Policy

These monthly quotes are for a Preferred Plus rating.

The cost of the sample permanent policies is quite a bit higher than a term policy with the same face amount. Be sure to buy coverage that you can comfortably afford long-term.

Which type of coverage is best for you? Read our guide to learn more: Do I Need Term or Whole Life Insurance? Differences, Pros & Cons

See what you’d pay for life insurance

Comparison shop prices on custom coverage amounts from the nation’s top carriers with Quotacy.

Policy Amount: How Much Coverage You Need

A life insurance policy insures one person. The monetary value they’re insured for is called the policy amount, or face value. When they die, their beneficiaries receive a check for that same amount, also called a death benefit. 

If you pass away unexpectedly, your policy would ideally provide financial security for your loved ones to continue their standard of living. 

Your policy amount should cover the following:

  • Any remaining debts (student loans, your mortgage, car loan)
  • Contributions to your kids’ college funds (if applicable)
  • Regular expenses and bills your income currently covers (including the cost of raising kids, if you have any)
  • End-of-life expenses

Keep in mind: the more coverage you buy, the higher the policy cost. Be sure to buy what you can comfortably afford long-term. A $100,000 policy is 100 times better than nothing.

Policy Length: How Long You Need Coverage

Permanent policies last a lifetime. As long as premiums are paid, your beneficiaries will receive a death benefit no matter when you die. 

Term policies last for a set timeframe of your choosing. Your beneficiaries receive the death benefit proceeds if you die while the policy is active.

Term life insurance is significantly cheaper than permanent because it’s temporary and typically covers a person during their prime years. In other words, insurers think your risk of premature death is low.

If you can, buy a term length that equals your longest financial obligation. For example, if you just purchased a home, a policy with a 30-year term makes sense. Alternatively, buy the longest term you can afford.

Keep in mind, you can always apply for more life insurance later on in life if your needs or budget changes. But it will likely never be as cheap as it is today.

Unsure how long you need coverage for? Read our guide for the answer: How Long Should Term Life Insurance Last?

What Is the Best Life Insurance for Young Adults?

We recommend term life insurance for young adults. Term life insurance is customizable to your specific needs and budget-friendly.

In addition, most term life insurance policies include a conversion option. If your needs change, you can convert your term coverage to permanent later in life. The best part is that it uses whatever risk class you were approved for when you bought the term policy.

In other words, even if you were to develop stage IV cancer and become uninsurable, you could still convert your policy with the same health status you had prior.

If you currently have a health condition or maybe lifestyle issues that you’re concerned an insurance company won’t approve of, rest assured that not all life insurance companies evaluate similarly. 

For example, if you recreationally use marijuana, you can still get approved for life insurance. Some insurance companies are more lenient than others, so working with an independent broker who can shop your case is essential.

Here at Quotacy we have contracts with over 25 top-rated insurance companies and will advocate for you.

Benefits of Life Insurance at a Young Age

As a young 20- or 30-something, your life insurance costs will likely be very low. If anyone depends on your income or would feel financial hardship upon your death, buy life insurance while it’s affordable. Don’t wait for your rates to increase. 

Here are a few reasons why buying life insurance as a young adult is a good idea.

1. You get the lowest rates.

Life insurance rates are determined by age and health, among other factors. The closer you are to average life expectancy, the higher the odds the insurance company will need to pay a death benefit. Age also increases the likelihood of developing certain diseases and conditions.

Those issues can increase the odds of passing away earlier and needing to make a claim on the policy. If you buy coverage when you’re still young and healthy, you’ll have lower monthly premiums than if you wait.

Want to know how much life insurance costs if you wait? Learn here: Term Life Insurance Rates by Age

2. You may not need a medical exam.

Many life insurance companies offer no-exam policies if you meet specific criteria. Being young and having no chronic medical conditions increases your chances of not needing an exam.

3. Less financial risk for your loved ones.

Whether it’s for your parents who help you pay your student loans or a spouse helping raise your children, buying life insurance now provides protection and peace of mind.

It’s easy to continually push buying life insurance to the bottom of your to-do list. Don’t get into the mindset that you have plenty of time to buy life insurance. You never know what tomorrow will bring.

4. Less worry about future insurability.

Many term life insurance policies automatically come with a conversion option free of charge. With this option, you can convert your term policy into a permanent one before the option expires.

Converting a term policy into a permanent policy increases your premiums significantly. Still, if you’re diagnosed with a serious—or even terminal—illness, this option can be a lifesaver for your family. You are guaranteed the option to convert to lifelong coverage, no matter your health status.

Learn more about locking in your insurability: The Benefits of Locking in Insurability with Term Life Insurance

Get Quick and Anonymous Term Life Insurance Quotes

If you’re a seasoned online shopper, you probably know how far some companies will go to get your email or phone number in exchange for basic information. 

Annoying, right?

Here at Quotacy, you can get as many term life insurance quotes as you want without handing over any contact information. Compare policies and rates in peace. When you’re ready to apply, completing the online form only takes a few minutes.

Once you submit your online application, you’ll be assigned a dedicated Quotacy agent to help you from start to finish, infinity and beyond. As an independent broker, we don’t work for insurance companies. We work for you.

Want to know more about us? Check out our About Us page to learn about our core values, how we make money, and read our customer reviews.

Note: Life insurance quotes used in this article are accurate as of April 19, 2023. These are only estimates and your life insurance costs may be higher or lower.


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