Young adults don’t typically think about life insurance. After all, in your 20s and 30s, you probably feel like your entire life is endlessly stretched out ahead of you. You have all the time in the world to make big decisions about your life. Why think about something you might not need for hopefully many many years? This is a huge mistake. Life insurance is more valuable and necessary than you might want to think about. Let’s explore some key details about life insurance, why you should have this coverage, and looking into getting this important coverage in your 20s and 30s.
What Is Life Insurance?
Life insurance is meant to help take care of your dependents after you have passed away. It can be used for a variety of expenses such as funeral costs, to pay down debt or mortgage amounts, as a livable income for a spouse as they adjust to life without you, and can even go towards children’s education. The amount of coverage you'll want to buy will vary depending on how much your dependents will need your income if you pass on. This is definitely a conversation married couples in their 20s and 30s should have as soon as possible to make these important decisions.
Life Insurance for Individuals
If you are single, you may still want to consider carrying a small policy that will cover your funeral expenses if you pass away. This makes sure that your relatives and loved ones don’t have to foot the bill on their own if something happens to you.
This is actually a very considerate reason for anyone to have life insurance. Some companies automatically give you a small policy with your benefits and insurance package at your job. Check with your HR department if you are unsure of what your company offers for you insurance-wise. You may not need to take out an additional life insurance policy if they already have something set up for you.
Life Insurance for Families
When you are in your 20s and 30s, married and have children, it’s time to consider carrying life insurance. What you need may change as your income grows, you buy a home or other assets, and if your family multiplies with more children being born through the years.
Types Of Life Insurance
There are two basic types of life insurance policies you can obtain.1 One is called “term” and the other is called “whole” or permanent life insurance.
Term Life Insurance
Term life insurance is paid out if the death of a person occurs within the time frame of the policy, usually within one to thirty years. A level term means that the death benefit stays the same throughout the policy’s duration. Most of the life insurance purchased is considered “level term.”
Whole Life Insurance
A whole life insurance policy is paid out whenever you die. It doesn’t have a specific time limit. Sometimes the premium goes up each year or starts out higher and may go down eventually as the years go on. Under this type of life insurance, there are quite a few variations in coverage, so make sure you get the one that’s right for you. Understanding all the ins and outs of your coverage may seem complicated, but it’s worth looking into so you completely comprehend what you are getting for your money.
A financial advisor can help you determine how much life insurance you'll need to cover your family's needs in the event that something happens to you or your spouse. It’s not just coverage for you. Many two-income families need to have life insurance for both spouses to make sure that the standard of living will continue for the remaining spouse and children, if one partner passes away.
While life insurance may not be a pleasant subject to talk about, being prepared for anything that might happen, even in your 20s and 30s, is important for the well being of your family.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.