Life insurance may not seem like a priority when you're young and don't have the responsibilities of a family. You might wonder why you need coverage, who it would benefit and how it might save you money later.
Here's why getting life insurance coverage now is a smart financial decision.
1. Life insurance premiums are based on your age and health.
Getting life insurance coverage can be easier while you're young and healthy. Insurance carriers offer and price life insurance policies based on your age and health at the time you apply. Life insurers know the younger you are, the more likely it is you'll be around for many years. This makes insuring you less risky for them and cheaper for you — probably less expensive than you imagine.
Getting life insurance before unexpected health changes occur can be beneficial. Insurers also base pricing on answers you give to questions about your health. These answers help insurers determine the probability that you'll stay well.
2. Life (and insurance) gets more expensive with age.
Your expenses will inevitably grow as you get older and move forward in your career. Your budget will have to change based on where you decide to live, if you buy a home and especially if you decide to get married and start a family.
Your life insurance coverage should also grow to reflect these changes, and if you buy life insurance early — before these different life stages — it will likely cost less to adjust your policy as time goes on than it would to buy a new policy later in life. By taking advantage of lower premiums when you're younger, you'll be saving money on insurance costs later.
3. You may be able to obtain more money in term insurance now.
Since it's usually more affordable to buy a policy when you're younger, you may be able to obtain more in term life insurance. Term insurance, as the name suggests, is life insurance that provides coverage for a specified period of time (the “term”) at a fixed rate that will remain the same across the life of the policy. Generally speaking, term policies tend to be more affordable than whole life insurance policies, delivering more bang for your buck.
The primary purpose of life insurance is to protect your income and those who depend on it. As your life grows and changes, it’s important to make sure you’re covered every step of the way. Having life insurance in place early on can set you up for greater savings and better financial protection down the road.