Life Insurance for Young Adults

Life insurance is an essential financial investment that, unfortunately, many people do not think about until after they need it.
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Life Insurance for Young Adults

Written by Brian Greenberg

Last updated: November 24th, 2022

Reviewed by Paige Geisler

Even young adults can benefit from purchasing a life insurance policy to help cover final expenses after their death. Many policies last for decades, and buying them early can sometimes mean the original amount matures or grows over time.

Is Life Insurance a Smart Idea for Young Adults?

Yes, life insurance is a smart idea for young adults — and people of any age. In fact, the younger you are when you first purchase your life insurance policy, the better. Buying at a younger age means you qualify for lower rates, which will increase as you age and possibly develop health problems. Plus, you can borrow against some types of life insurance if you need to use your policy’s cash value for financial needs.

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What Is the Best Type of Life Insurance Policy for Young Adults?

Whole life insurance is generally a better option if you purchase a policy as a young adult because your coverage has no expiration. However, the downside is whole life insurance policies typically have higher premiums than term life insurance policies. This can make it challenging to afford for low-income earners or those who still have a lot of debt from student loans, mortgages, or car loans.

Should Young Adults Consider Term Life Insurance?

Term life insurance is not generally the best option for young adults. These policies only provide coverage for a set period, after which your benefits expire. Most term life insurance policies are for 5, 10, 15, 20, 25, or 30 years. However, a few policies provide coverage for 40-year terms. That said, term life insurance generally offers more affordable premiums. Young adults with limited incomes are often drawn to these policies because of their lower premiums. If you consider term life insurance, you should find one offering the longest term possible. Everyone thinking about life insurance should weigh the short- and long-term benefits of whole life versus term insurance.

Should Young Adults Consider Whole Life Insurance?

Whole life insurance is ideal for young adults because the coverage never expires, even if you live another 80 years after purchasing your policy. However, it is significantly more expensive than term life insurance, making it challenging for low-income young adults. However, whole life insurance is generally the best option if you can afford the premiums.

Plus, purchasing your whole life insurance policy in your 20s or 30s means locking in lower premiums because you are less likely to have preexisting health conditions. When you try to purchase whole life insurance in your 40s, 50s, or 60s, you could run into higher premiums because you are more likely to have preexisting health problems that place you in a higher risk category.

Should Young Adults Consider No Medical Exam Life Insurance?

No medical exam life insurance can be a good option for some young adults. For example, young adults with preexisting conditions might want to look at this option. Although no medical exam policies often have higher premiums, the costs may still be lower for individuals with health problems versus alternatives. Policies that do not require a medical exam can also be a good option if you want to purchase coverage amounts lower than what traditional life insurance providers offer.

What Is the Best Life Insurance Policy for Young Expecting Families?

What Is the Best Life Insurance Policy for Young Expecting Families?

Insurance Policy ChoicesProsCons
Choice No 1: Ladder
  • Plans start at less than $5/month
  • No medical exam (up to $3 million in coverage)
  • The process is 100% online Available to anyone aged 20 to 60
  • Only term life insurance (options of 10 to 30 years)
  • People with a biological parent or sibling with certain conditions may not qualify for the best rates
Choice No. 2: Haven Life
  • Prices start under $5/month
  • Apply online and get an immediate decision on coverage
  • Medical exams are not necessary for most people
  • Policies are flexible and can be adjusted as necessary
  • Not available to active military personnel or anyone currently enlisting
  • Some people may need a medical exam before receiving coverage
  • Quoted rates may change before the policy becomes active

What Is the Best Life Insurance Policy for Young Single Adults?

What Is the Best Life Insurance Policy for Young Single Adults?

Insurance Policy ChoicesProsCons
Choice No. 1: Protective
  • Offers term life insurance policies up to 40 years
  • Coverage starts the same day you purchase the policy
  • One of the cheapest options for healthy, single young adults
  • J.D. Power customer satisfaction rankings are below average
  • Requires medical exam
Choice No. 2: Mutual of Omaha
  • Term life insurance options that return your premium if not used
  • Highly customizable options Living benefit riders (including uncommon ones)
  • Some applicants don't need a medical exam
  • Medical exams are required for certain applicants
  • No traditional whole life insurance options for people under the age of 45
  • Must apply through an agent
  • Pricier than some other options

Is Life Insurance Worth It for a Young Adult?

Yes, life insurance is worth it for a young adult. It is often better to purchase a life insurance policy when you are younger because it allows you to lock in lower monthly premiums.

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What Is the Average Cost of Life Insurance for a Young Adult?

The average cost of life insurance varies significantly based on age, lifestyle factors, health conditions, genetics, etc. However, recent statistics show that a 30-year-old man pays an average of $18.75 monthly, while a 30-year-old woman pays an average of $15.83 monthly for $500,000 in coverage. At age 40, men pay $28.17 monthly on average, while women pay $23.67 monthly on average for the same amount of coverage.

Key Takeaways

Life insurance is an essential financial investment that even young adults should begin thinking about. Although term life insurance policies are more affordable, whole life policies are a better option for young adults if you can afford the higher monthly premiums. The best place to find adequate coverage for affordable rates is by searching online.

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