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Life Insurance in Your 20s and 30s: Is Buying a Policy a Good Choice?

Dec 18, 2021 3 min read Wanda Thibodeaux

Key takeaways

  • Life insurance can be an integral part of your financial strategy.
  • The younger you are, the less you’ll pay.
  • Online options could let you skip a medical exam.


If you're in your 20s or 30s, life insurance might not immediately spring to mind as a must-have purchase. After all, nobody expects to need life insurance so young, Plus, probably have plenty of other ways to spend your money. Even so, buying a policy when you're just starting out is often a smart step in your overall financial journey.



Benefits of Life Insurance in Your 20s or 30s

Buying life insurance before you think you need it can be particularly smart if you're facing a few of these common goals or situations:


Life insurance for paying off debt

Going to college is a main priority for many young people. Many students focus on undergraduate degrees in their 20s and pursue a master's or doctorate if desired a little later. Problem is, most students can't afford to pay for that education out of pocket. Indeed, in 2019 nearly seven out of 10 graduates walked away with a bachelor’s degree—and nearly $30,000 in debt on average. If something happens to you, and your parents cosigned on your college loans, they may be held responsible for the remainder of the debt. The death benefit from life insurance can be used to pay off the debt and relieve them from those payments.


Life insurance for cutting costs later

Insurance companies use a variety of factors to determine the cost of a policy. The key elements are your age and health. The closer you are to average life expectancy, the higher the odds are that the company will need to make a payout. Age also increases the likelihood of developing certain illnesses.. Those issues can up 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 likely have lower monthly premiums Opens in new window than if you wait. However, paying less each month for many years can end up costing more overall versus paying a higher premium for a short time. If saving money is the goal, consider how much risk you're facing.


Life insurance for replacing income

Many people in their 20s or 30s have no dependents who count on them for income. But if you get married or have kids, you might want to consider a safety net. This can help ensure that those loved ones still will have enough money to live comfortably or pursue ventures such as college after you're gone. The same holds true if you're responsible for a disabled or elderly relative, which is becoming increasingly common.

Even if you don’t have dependents, you may want to contribute to your community or society as a whole. Instead of naming a loved one as your policy beneficiary, you can designate a nonprofit to receive the death benefit from a life insurance policy.


Where and how to buy

For many people, the most direct route to life insurance is through their employer. They might offer coverage options—often at lower group rates—as part of a larger benefits package. But the U.S. boasts nearly 800 life insurance companies (including yours truly), so your options abound.

Traditionally, the easiest way to buy a policy was to find a local company and talk to an agent. But as America’s digital divide narrows, particularly in the age of COVID-19, getting coverage online—like from Prudential—is fast becoming the method of choice.

Either way, shop around for life insurance and get some quotes before deciding which policy to purchase. Once you know which company you want to go with and which policy you'd like, you'll need to submit a policy application.

Expect representatives from the company to ask you a broad range of questions, most of which will be about your health. You also might need to get a basic medical exam Opens in new window, unless you're willing to pay significantly higher rates. Some companies also require a deposit. If the one you choose doesn't, you'll lock in your policy when you pay your first premium.

Qualified applicants can get a term life quote and buy a policy online from Prudential.


What you can do next

Not everyone in their 20s and 30s should buy a life insurance policy, but it can be a good idea for those who have dependents, would like to leave a legacy, or have debts. First learn about the different types of life insurance to decide which, and how much coverage, might be right for you. Then go shopping.

As you look for coverage, remember that your needs likely will change over time—say, once your kids are out of school, your mortgage is paid off, or your retirement nest egg can cover your final expenses. You might decide on a strategy called "layering," where you buy overlapping term policies so your amount of coverage increases or decreases with your projected needs. A financial professional likely can help you decide what makes the most sense for your situation.

Author detail

Wanda Thibodeaux is a freelance writer and sole proprietor of Takingdictation.com. Her work has appeared in online and print publications such as The Finance Base, Legal Beagle, Bankaroo and Inc.com.


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