You’re young, carefree, and starting to learn all about the world of adulting. At this point, life insurance is just something for old people, right? You probably don’t spend too much time thinking about what will happen when you die. And who wants to, right? It's a somber subject. But what's worse is being unprepared. If you have a spouse, kid, an aging parent, or anyone in your life that depends on you, here are some things to consider on why it's a good idea to invest in life insurance while you’re young.
1. It's Cheaper When You're Young
The number one reason to invest now in life insurance is that it will be cheap. Your monthly rate could be as low as $12. Because of your age, you are considered a low-risk client for life insurance carriers. If you are a low-risk, your rate is lower. Being young, healthy, and a non-smoker you will have the lowest premium available.
2. You Have Debt
Chances are you're paying off a big student loan. Most millennials are. If something were to happen to you, the co-signer of your loan would be held liable for the debt, especially if it’s a private loan. A life insurance policy will protect your loved ones from having to pay for your debt, including mortgages, credit cards, and your student loans.
3. People Depend On You
Even if you don't have kids, you probably still have people in your life that depend on you. If you’re a wage earner you’ll want to replace your salary for the people that depend on you. If you are providing for an aging parent or someone with special needs, who will provide for them if something happens to you? A spouse or a significant other is a dependent and they would be affected if you were to die. Not only would they be dealing with grief, but also the finical loss of income and burial costs. Life insurance can offer you peace of mind knowing that all of your loved ones will be taken care of.
4. Funerals Are Expensive
As bad as this sounds...it’s really expensive to die. The cost of a funeral can range anywhere from $5,000 - $10,000 and you know your loved ones will only want the best for you. Life insurance will cover the costs and reduce the financial burden on your loved ones during their time of grief.
5. Employer Life Insurance May Not Be Enough
Working for a company with great benefits, you probably assume you’ve got life insurance covered. Most employers do offer a life insurance plan as part of your benefits package. However, if you were ever to become sick and unable to work, your employer's policy may no longer be effective. Or the coverage may be minimal, the standard company offered policy is $50,000. If you have debt, $50,000 isn’t going to last very long. A policy separate from your workplace insurance will ensure your loved ones will have the needed amount to cover your debt, income replacement, and funeral costs.
6. It’s Will Build Your Wealth
Most people don't realize a trick to building wealth is with life insurance. If you want to build wealth, it's a good idea to start when you're young. Permanent life insurance policies will allow you to build savings in a tax-advantaged account. Basically, with life insurance, you are investing a lot of money into an account and letting it grow tax-free. That’s money you can access during your lifetime and can always be used as the ultimate emergency fund if it’s ever needed.
I know talking about death and illness is not a fun subject, but being unprepared in life can cause a huge burden to your family. Just consider the peace of mind a life insurance policy can bring. And remember, the younger you are, the less expensive it will be!