Even if you feel invincible, it might be worth looking into life insurance. Can Paula Pant convince you to take the next step?
You’re in the prime of your life—young, healthy, vibrant, on top of the world. You may not have a family to support or a mortgage to sustain, but if you do, you’re confident you can provide for them for many years to come. Of all the things you need to worry about, life insurance is near the bottom of your list.
But even when you’re young and relatively unencumbered, life insurance is worth considering. Here are some of the big reasons why you should be thinking about it:
1. You Can’t Predict the Future
Just because you’re young and in good health now, that doesn’t mean you’ll live forever. Accidents and illness can befall us at any time. Just like you should have an emergency savings fund for unexpected expenses, it’s also wise to invest in life insurance coverage. You just never know what might happen.
2. It Helps Ease the Burden on Your Loved Ones
Perhaps you don’t have any dependents – no spouse or children who depend on you for support. But your passing may still have a financial impact on your loved ones.
Should the unexpected happen, you don’t want to leave your family struggling to pay for funeral expenses, therapy sessions, and lost income from time away from work when they’ll be sorting out your final affairs. Life insurance can help cover end-of-life costs like these.
If you have a co-signer on a loan (e.g., if mom and dad co-signed on your student loan debt or your car purchase), covering these financial bases when you’re gone is especially important. A small life insurance policy is a nice gift to leave behind so that your death doesn’t put any additional stress on those you love.
3. Kids Aren’t the Only People Depending on You
Even if you don’t have children, there are still other people who rely on your support.
Your parents, for example, may be relying on you to handle day-to-day living tasks as they get older. They might ask you to mow the lawn, clear the gutters, or chauffeur them around town. They may need you to help them configure their new computer, assemble the treadmill they just purchased, and rearrange the furniture.
If you passed away, they’d need to hire someone to fulfill all of these tasks – especially if you’re an only child or your siblings aren’t available. A life insurance policy would help your parents cover these extra costs.
If you have a beloved pet, naming the guardian you’ve chosen for Fido or Fluffy as a beneficiary can help allay costs like food, supplies, and vet service — a nice way to thank the person who agrees to give your furry friend a home in your absence.
If you’re passionate about a particular charity or cause, a life insurance policy can help you leave a legacy. You can even arrange for your nieces and nephews to receive a certain amount to help with their college funds if you don’t have kids of your own.
4. It Will Never Be Cheaper or Easier
When you’re young and healthy, it’s easier to get life insurance and your premiums are the lowest they’ll ever be. Getting insured now, when you pose a lower risk to insurance companies, enables you to secure coverage for yourself at the best cost.
Even if you develop a health condition down the line, you will already be in — and your payments, even if they increase as you age, will still be more affordable than if you waited to get coverage at a later date.
What Type of Insurance Should You Get?
Okay, so you’ve realized life insurance would be a smart investment for you. How do you make sense of all your options? Let’s break it down…
The main policy types are:
Term life insurance – this coverage lasts for a certain period of time and can be renewed at the end of each term
Whole life insurance – this is a permanent policy that combines life insurance coverage with an investment component and pays a guaranteed fixed amount upon your death
Universal life insurance – another permanent policy that combines life insurance coverage with an investment component, this one does not guarantee a specific rate of return but rather depends on market values
Term life insurance has lower premiums (relative to payout) than the other two options, and allows you secure coverage for a specific period of time, such as while you’re paying back certain debts. You may find you no longer need as much coverage after your mortgage is paid in full, for example, or your kids have finished college.
Regardless of which of these options you choose, however, don’t assume that your relative youth and health means that you don’t need life insurance. On the contrary, your age presents you with one of the best opportunities to buy the coverage that you need to make sure your family and legacy are secure.
How are you thinking about your insurance needs, Grownups? Is there a friend or relative you know who could benefit from this advice? Share your thoughts with us in the comments section…
Paula Pant quit her 9-to-5 job, traveled to 33 countries,
launched a business she runs from her laptop,
and uses the profits to invest in real estate.
She shares details about these adventures and more on
her website, Afford Anything.