Last updated: December 27th, 2022
Reviewed by
Rebecca Thrift
Licensed Insurance Agent
While there’s no perfect age for obtaining coverage, there are plenty of reasons why purchasing life insurance as early as you can is a smart move.
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As a general rule, when it comes to life insurance, the sooner you can get it, the better. Younger people are usually healthier, giving them an advantage during the life insurance underwriting process. Of course, many other factors determine your premium costs, but it’s almost always a good idea to obtain coverage when you’re young.
Here are the average costs of a $500,000, 20-year term life insurance policy by age and gender for preferred individuals:
All things considered, your ’20s are likely the ideal time to purchase life insurance. Assuming you’re in good health and don’t smoke, your premiums should be quite low. For example, the average cost of a $250,000 term life insurance policy for a 25-year-old male is just under $15 a month. This number jumps to $55 a month for a 55-year-old male. Remember, life insurance premiums only go up as you age, even if you stay in good health, so it’s in your best financial interest to obtain a policy as early as possible.
Most 20-somethings just starting out don’t have a lot of extra money lying around, but life insurance should be seen as a worthwhile investment. While you might not have anyone else depending on your income as a young person, a life insurance policy can still help your loved ones by covering any outstanding debt and costs related to your final expenses.
Although your premiums will be lower due to your age, life insurance is still an extra expense you’ll need to factor into your budget. As such, there may be opportunity costs to putting money toward a life insurance policy as opposed to something else, such as a savings or investment account.
Term life insurance is a popular choice, but you run the risk of the policy expiring before you need it if you obtain coverage at a younger age. This could require you to purchase another, more expensive policy later to maintain coverage.
Term life insurance provides coverage for a predefined period, usually 10-30 years, after which the policy expires with no cash value or benefit payout. It’s usually less expensive than permanent life insurance, but you’re much more likely to outlive your policy as a result. Because of these factors, it might be prudent to wait until you’re a little older to purchase term life insurance to get the most out of your policy.
However, a benefit to term life insurance policies is that they can often be converted to permanent policies in the future to extend coverage.
Permanent life insurance differs from term life insurance in that policies never expire, but the premiums are more expensive. Your coverage lasts your entire life, and permanent life insurance policies usually accumulate cash value that can be withdrawn from in the future.
Purchasing permanent life insurance at an earlier age ensures your premiums remain low and that your policy has ample time to build cash value.
Although there are many relational and economic benefits to pooling your money together, one thing to consider is how debt factors into your financial situation. Depending on your circumstances and state laws, your spouse may be liable for your debt in the event of your death. Life insurance is a great way to ensure your spouse can manage your financial obligations and replace your lost income if you die prematurely.
Another advantage to purchasing life insurance soon after marriage is that a policy that builds cash value over time can be helpful if you and your spouse need to tap into the funds for a major expense in the future, such as buying a home or starting a business.
With the average cost of raising a child from birth through 18 years old topping $300,000, it’s important that your family can meet its financial needs and maintain its standard of living if you pass away. Starting a family is a great incentive to obtain life insurance to provide for your children even after you’re gone. Additionally, life insurance is especially imperative if you’re the sole income earner for your family.
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.
I've worked for Safeco and Liberty Mutual as a sales agent and claims adjuster for the last five years. My claims experience is primarily auto insurance, but I am licensed to sell auto and property insurance (homeowners, condo, renters, long-term renter, etc) currently.
