If you want to build a solid foundation for your future when you're young, it is essential that you have the correct tools. Of course, you will need a budget to set aside money to save for retirement, pay off debt, and build an emergency fund. Another tool that you should consider purchasing is life insurance.
According to a Princeton survey conducted in 2017 and commissioned by InsuranceQuotes.com, 65 percent of people aged 18 to 28 years old don't possess life insurance. Seventy-one percent of the individuals without coverage said they didn't need it because they were healthy and young. However, there are several good reasons to purchase a life insurance policy in your 20s.
The Benefits of Life Insurance for Young Adults
Life insurance can fulfill different financial needs. First of all, if you leave behind children or a spouse who need your paycheck for living costs, a life insurance policy can replace the lost income.
However, if you're in your 20s, you are more likely to not have a spouse or children. However, this doesn't mean that this will be true five or ten years from now. If you decide to start a family in your 30s or later in your life, you may opt to get life insurance then. However, the disadvantage of buying a life insurance policy then is that you may end up facing higher premiums. The younger you are when you initially purchase a life insurance policy, the less expensive it will be.
Not only will life insurance replace lost income, but it can also be utilized to pay off the debts you owe. In your 20s, student loans will probably be your largest debt. The average balance of student loans for 20-somethings is $22,000, according to the Federal Reserve data. When an individual dies, federal student loans are canceled and discharged automatically. Parent PLUS loans are included. However, the same is not true for private student loans cosigned for with parents.
Cosigners are legally responsible for a debt in equal amounts. If you pass away and your parents cosigned on the loans, your parents may still be expected to pay the amount owed. Fortunately, a life insurance policy could wipe out this debt.
As you can see, even if you're healthy and young, there are many reasons why you should consider buying a life insurance policy now rather than later. For more information about why you should buy life insurance in your 20s, don't hesitate to contact us.
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