Should you get life insurance your 20s?
If you’re in your twenties and have spent a couple of years working, chances are you are nowhere near thinking about purchasing life insurance just yet. There are other priorities when it comes to spending your money, like buying a car and moving into your own apartment. Besides, you’re a healthy, young individual so any life insurance policy is far off in the distance, right?
Although many people only start considering life insurance when they are ready to settle down (in their thirties, according to Statistics SA) and start a family, it’s never too early to begin investing and planning for the future. Here are some arguments for taking out life insurance sooner rather than later.
Your premiums will be cheaper
Generally, the older you are the higher your premiums become. That’s because you pose a higher risk to an insurance company when you apply for cover much later in life, as you’re more likely to pass away during the policy term.
The average cost of a policy with a R1 million face amount is about R274 per month for a non-smoking 27-year-old male. By contrast, the monthly premium for a non-smoking 49-year-old male is just over R500, based on calculations on the Hippo.co.za comparison website.
You have several financial obligations
Many graduates and young professionals have some form of debt. Research tells us that 70% of millennials have personal loans, 42% are paying off a car, 27% are paying off credit card debt, and 21% are paying off an overdraft. Unfortunately, debt does not simply go away when you die, and instead gets passed on to surviving family members through your estate. A life insurance policy can prevent your family from being burdened with your financial obligations when you die.
Someone is dependent on your income
For many, their twenties is a decade of having mostly “me time”, dotted with relationships here and there, before settling down. It’s likely that you are currently single and childless - but you probably won’t stay alone forever. Eventually, you’ll find your soul mate, tie the knot and start a family. Getting a head start in planning your financial future will certainly pay off.
If there are people who currently rely on your income - whether you already have a family or looking after your parents - a life insurance policy will pay a death benefit to them to replace your income in the event of your death. Even though your risk of dying prematurely is low, it’s still a probability, and might be something you’d want to be prepared for financially.
You’ll need money for your funeral costs
You may be young and fit as a fiddle but there are other ways of kicking the bucket at an early age. Available data and evidence show that young people, mostly young men who also happened to be breadwinners in their families, are the main victims of road accidents. The reason a life insurance policy would benefit you as a single adult is that you will be able to pay your own funeral costs. Some life insurance policies pay a portion of the insured amount within 48 hours to cover funeral and related expenses.
It may be that in your twenties, when you’re living a life full of adventure without care, a life insurance policy will seem like something you’ll only need as you grow old. You’ll most likely only need cover when your responsibilities change, so there isn’t really an ideal age to get life insurance, there is certainly a right time to do so.