Last updated: November 24th, 2022
Reviewed by
Paige Geisler
Licensed Insurance Agent
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.
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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.
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.
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.
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.
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.
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.
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.
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.
Brian is the founder and CEO of Insurist and carries Life, Health, and Property & Casualty licenses in all 50 U.S. states. Since 2013, Brian has been a member of Million Dollar Round Table, a designation for the top 1% of financial advisors worldwide. Brian has been featured in Yahoo! Finance, Money.com, Entrepreneur.com, Life Happens, Forbes, MSN, and Good Financial Cents. Brian’s goal is to show customers the best products, the quickest answers to their questions, and provide expert advice.
Paige is an assistant agent for State Farm and is licensed to sell property and casualty, health, and life insurance in Virginia. She handles all different types of insurance and financial services and is currently working on a securities and bonds license. Paige has a degree from Radford University in English and is a certified notary.
