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Life Insurance for Young Adults (Should You Buy in Your 20s?)

Life insurance for young adults is usually one the last things people think about when they’re in their 20s. They have other concerns. And, truth be told, many people in the 20 to 29 age range don’t need life insurance. If you are debt free and single, you probably don’t need it. That being said, if you are considering getting married or starting a family in the next few years, planning ahead and getting coverage in place while you are healthy can save you thousands on premiums over the next few decades of your life.

life insurance for young adults ratesTo see rates for your specific age, use the instant quote tool on the left (top if you’re on mobile). We ran quotes for ages 21, 25, and 29 year old men and women which are included toward the bottom of the page. Call (800) 905-0333 for more information on getting started.

Rates on life insurance for young adults can be shockingly cheap. Like your Chipotle burrito costs more than your life insurance cheap. There are multiple insurance companies that will cover a 25 year old in good health for $8 a month.

Why People Buy Life Insurance in their 20s

The two most common reasons why someone would buy life insurance in their 20s are to cover a debt or the birth of a child.

cheap life insurance for young adults

Find out how to get life insurance even on a college student budget at (888) 905-0333.

Getting any sort of credit can be hard when you’re fresh out of school and beginning your career. This frequently leads to lenders requiring a cosigner on car loans or student loans. Which means that if you die, your parents are stuck with your debt. Depending on where your parents are in life, this can be an enormous financial burden on top of losing their child. Life insurance for young adults takes away that potential burden.

After covering debt, children are the second most common reason someone will take out a life insurance policy in their 20s. This is because most people haven’t yet had enough time to build up their investments to provide for their child’s college tuition. Plus, most households require both parents to bring in an income. Thus if one person’s income gets removed from the picture, the whole family struggles.

Benefits to Buying Life Insurance In Your 20s

Most people hit their peak health in their 20s. So they get lower rates. Your rates are determined by the likelihood the insurance company has to pay out on a claim. Each company has what are called Mortality Tables which determine someone’s life insurance rates. The simple explanation is the average lifespan in the United States currently 81 years old for women and 76 years old for men according to a 2012 CDC study. The younger you are the less likely you are to die and thus incur a claim.

Younger typically means healthier which in turn means lower rates.

Health plays a big factor into premiums as well. Our bodies haven’t started developing the problems they do in later decades. Problems that start small and build up over time like arthritis, high blood pressure, or liver disease. Those increase the likelihood of death and so increase life insurance rates. In short, the younger you are, the lower your rates. And life insurance for young adults who are healthy are the lowest of the low rates.

Most companies have auto-pay options to make remembering easier.

People have this habit of setting things to take care of themselves automatically then forgetting about them. For example, you might put your monthly internet bill on auto-pay so you can get uninterrupted service without having to think about it. What is interesting is this same mentality applies to things like insurance. We’ve had a few clients come to us who knew they were going to start a family a few years later. They wanted to get something in place BEFORE the expenses of children so that they wouldn’t worry about another cost to having kids.

Why You Might Want to Wait

Life is all about trade-offs. If you want to spend a year backpacking across Europe, you can’t buy a new puppy. It could possibly be done, but it would be easier if you just waited on one or the other. You can make more money in life and we hope you do. But you can only use the money that comes in every month and that involves choices. Buying life insurance before you need it could be taking away other opportunities to make that money work for you.

If you are single. If you don’t have any children. If you don’t have any debt. If you have the liquid assets to cover your funerals costs. You probably don’t need life insurance. You can purchase it for the reasons above if you suspect you will be needing it in the next few years, but it might be a better idea to look into investment vehicles for that money. Put the money into in annuity or IRA so it can grow and benefit you later. Invest in yourself before you protect the family you don’t yet have.

How to Save Money on Life Insurance for Young Adults

life insurance for young adults over time

You don’t need to worry about getting life insurance all at once. Only take what you need at a time.

Layering is a common practice in life insurance since people have different needs at different stages in their life. Layering means that people might hold two or more policies as they advance through different life stages. One common layering strategy in life insurance for young adults is someone will buy a small 10 year policy when they get married to cover their spouse should anything happen. Then a few years down the line when they have children, they’ll take out a larger 20 year policy that would provide for the children.

For example, lets say John and Sally get married at 22. They take out 10 year 100,000 policies to cover their student loans and any debts they might incur during the first years of marriage. John and Sally each get a second layer of life insurance when of 20 year $500,000 policies when they get pregnant at age 25.

At 32, John and Sally’s first policies (the 10 year term at $100,000) expire. So then they revisit their needs and determine if they want to layer another policy on top. They have almost saved up enough for the down payment on their first house so they decide to wait until the mortgage is in place and they know how much they’ll need to cover that. At 33, they finally buy their first house and each take out 30 year policies to cover half of the mortgage so their spouse and kids could keep the home if the worst should happen.

Steps For Saving Money

Calculate life insurance for young adultsThe first step is figuring out how much money you need. Our Life Insurance Needs Calculator is a good starting point to figure out how much you need. Knowing before you talk to anyone about your insurance needs gives you a peace of mind that you won’t find yourself in a position where you are paying for more than you need.

Term Life Insurance Rates for Ages 21, 25, and 29

Because buying life insurance in your 20s is pretty rare and the people looking for it fall under a wide range of categories we ran the average rates for ages 21, 25 and 29 to give you a ballpark idea of what your rates might look like. Keep in mind these are averages of 15 to 20 companies per term length, amount paid on death, and age. There are multiple options for life insurance for young adults that are $10 a month or less.

To get more specific rates for your age, use the Instant Quote tool on your left (or top if you’re on mobile.)

Term Life Insurance Quotes for Men Ages 21, 25, and 29

Age 21 – Male – Preferred Monthly Rates

$100,000 $250,000 $500,000 $1,000,000
10 Year Term $14.65 $20.76 $26.11 $36.40
20 Year Term $16.95 $25.27 $34.58 $53.00
30 Year Term $20.15 $33.00 $48.50 $76.50

Age 25 – Male – Preferred Monthly Rates

$100,000 $250,000 $500,000 $1,000,000
10 Year Term $14.30 $20.52 $25.63 $35.27
20 Year Term $16.73 $25.18 $34.42 $52.60
30 Year Term $20.10 $33.20 $48.69 $77.33

Age 29 – Male – Preferred Monthly Rates

$100,000 $250,000 $500,000 $1,000,000
10 Year Term $14.50 $20.86 $26.61 $35.80
20 Year Term $17.27 $26.18 $35.16 $54.73
30 Year Term $21.60 $35.90 $51.06 $82.83

 

Term Life Insurance Quotes for Women Age 21, 25, and 29

Age 21 – Female – Preferred Monthly Rates

$100,000 $250,000 $500,000 $1,000,000
10 Year Term $11.95 $15.57 $19.74 $27.20
20 Year Term $14.27 $20.18 $26.53 $39.33
30 Year Term $17.10 $26.35 $37.81 $58.42

Age 25 – Female – Preferred Monthly Rates

$100,000 $250,000 $500,000 $1,000,000
10 Year Term $12.10 $15.71 $19.95 $27.73
20 Year Term $14.45 $20.45 $26.79 $40.27
30 Year Term $17.30 $26.80 $38.25 $59.58

Age 29 – Female – Preferred Monthly Rates

$100,000 $250,000 $500,000 $1,000,000
10 Year Term $12.50 $16.48 $20.74 $29.20
20 Year Term $15.45 $22.27 $28.21 $43.00
30 Year Term $18.75 $30.25 $41.50 $66.25

Permanent Life Insurance for Young Adults

Normally we recommend term life insurance. It’s more affordable and has specific uses. But let’s say you are maxing out your IRA and 401(k) contributions. Perhaps you are planning on having a family in the immediate future. You might consider permanent life insurance. With many of these policies, part if your premium (what you pay the insurance company) is invested in securities. However there is no stock market risk in the policy. The bonus is that you can access your money tax-free. So you can get part of your premiums back with compound interest.

Keep in mind that the primary purpose of a permanent life insurance policy is not the investment vehicle for your money. The primary purpose in life insurance. Whether this is right for you or not will depend on how investment savvy you are and a in depth conversation with your financial advisor. We recommend having some money in a safe vehicle (such as life insurance).  This will protect your money from risk and also from taxes.

low cost life insurance for young adultsIf you have any questions on how the cash accumulation feature works or whether it’s right for you, we’d be happy to explain the details that vary between how each company treats this feature. The consultation is completely confidential and free to charge or obligation. You can reach one of our advisors at (888) 905-0333.

Life Insurance for Young Adults Without a Medical Exam

Most of the time life insurance without a medical exam is significantly more expensive than traditional insurance. But luckily there is one company that offers life insurance for young adults with no exams at below average rates. The caveat is that you must be under 60 years old and applying for $500,000 or less. Because rates and policies are constantly changing, we aren’t naming the company in the post. If you don’t like medical exams (or needles), please give us a call at (888) 905-0333 for more details.

Age 21 – Male – Preferred Monthly Rates – No Medical Exam

$100,000 $250,000 $500,000
10 Year Term $11.00 $15.00 $21.00
20 Year Term $11.00 $18.00 $28.00
30 Year Term $15.00 $26.00 $41.00

Age 25 – Male – Preferred Monthly Rates – No Medical Exam

$100,000 $250,000 $500,000
10 Year Term $11.00 $15.00 $21.00
20 Year Term $11.00 $18.00 $28.00
30 Year Term $15.00 $26.00 $41.00

Age 29 – Male – Preferred Monthly Rates – No Medical Exam

$100,000 $250,000 $500,000
10 Year Term $11.00 $15.00 $21.00
20 Year Term $11.00 $18.00 $28.00
30 Year Term $15.00 $26.00 $43.00

Age 21 – Female – Preferred Monthly Rates – No Medical Exam

$100,000 $250,000 $500,000
10 Year Term $9.00 $12.00 $16.00
20 Year Term $10.00 $15.00 $22.00
30 Year Term $14.00 $22.00 $33.00

Age 25 – Female – Preferred Monthly Rates – No Medical Exam

$100,000 $250,000 $500,000
10 Year Term $9.00 $12.00 $16.00
20 Year Term $10.00 $15.00 $22.00
30 Year Term $14.00 $22.00 $33.00

Age 29 – Female – Preferred Monthly Rates – No Medical Exam

$100,000 $250,000 $500,000
10 Year Term $9.00 $12.00 $16.00
20 Year Term $10.00 $15.00 $23.00
30 Year Term $14.00 $23.00 $36.00

 

How Abrams Insurance Can Make a Difference

At Abrams Insurance we are independent agents. That means we are not tied to only one company’s products. We represent over 70 A/A+ rated companies. So no matter what your age or your medical history, we can find you affordable coverage.

The insurance company sets the prices. So there is no way that you can get the same policy at a better price somewhere else. The real difference is in the assistance from the agent. Sometimes underwriters come back with a worse rate class than what we feel it should be. After assisting thousands of people to purchase life insurance, we know what your rate class should be. So if the underwriter disagrees, we will find you a more generous company. It’s more work for us, but we don’t want you to pay a dollar more than necessary.

The Bottom Line

Our agents work for you and NOT for the insurance companies. Our goal is to find you the best rates. We use our knowledge of the particulars of the insurance underwriting system to do just that. Our ability to work with so many companies works to your advantage. We force companies to compete over who gets your business when you choose to buy.

Life insurance for young adults is not always necessary, but can really help out. Don’t take our word for it though. The experts of LearnVest talk about why you might need life insurance at a young age here.

Call us now at (888) 905-0333 to see how much money we can save you. Or use the Instant Quote tool to check rates for your specific age. Visit our Testimonials Page to read more about how we helped other people in all walks of life.

About Chris Abrams

Chris and his team work with clients across the country to help them navigate the insurance and financial world. His mission is to help people and businesses have the protection they need at the lowest possible price. He works on behalf of his clients and not the insurance companies. When not researching the latest financial and insurance topics, Chris can be found spending time with his family, traveling, cooking or running on the beach.

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