Life insurance is an important aspect of ensuring your financial wellbeing – but it is something that many (most?) people in their 20s don’t think about.
However, life insurance is a crucial step in securing your future and protecting your loved ones. Let’s look at the reasons why people in their 20s should consider setting this coverage up now instead of waiting until they’re older.
The first reason why you should consider insurance now is in case of your premature death. Life insurance can provide a financial cushion for those who are left behind, helping to cover expenses such as funeral costs, outstanding debts, and living expenses.
Without life insurance, the financial burden of these expenses can fall on the shoulders of your family left behind, causing additional stress and hardship during an already difficult time.
Additionally, life insurance can also provide a source of income for loved ones left behind if there is someone that is at least partially dependent on the income you earn today. For example, if you share a home with someone and pay part of the rent/mortgage, they would be stuck paying the full amount if you are suddenly gone.
The death of a contributing income earner can leave loved ones struggling to make ends meet, but with life insurance, they can receive a lump sum payment or a stream of income to help pay some of the expenses that your earnings cover today.
Life insurance can also be an important tool for young people who are just starting to build their financial futures. When your situation becomes more financially complex down the road (a larger mortgage, kids that depend on you, etc) you will have no choice but to setup life insurance but doing so when you’re older will cost more than starting now.
Term life insurance policies in particular can be an affordable way to provide coverage for a specific period of time, such as 20 or 30 years. This can be particularly useful for young people who are looking to purchase a home or start a family, as it can help to provide financial protection during these critical life stages without impacting their cash flow too much.
Another benefit of life insurance for people in their 20s is that it can be a great investment tool. Whole life insurance policies, for example, can accumulate cash value over time, which can be used to supplement retirement income or as a source of emergency funds.
Additionally, some life insurance policies offer the ability to borrow against the cash value, which can be a useful tool for those who are just starting to build their credit.
Life insurance is not just for older people, it’s an important planning tool to consider for people in their 20s too. While it may not be the most exciting topic to think about, taking the time to consider life insurance in your 20s can help to ensure that the future for you and your loved ones is secured.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.