You might think that this is too early in life for life insurance, and in some cases, you’re right. However, you might be surprised to learn that there are several reasons why this may be the ideal time to consider it. Let’s take a closer look at a few reasons why.
While graduating from college is a major milestone, it often comes with a hefty price tag in the form of student loans.
In the U.S., the current amount of average student loan debt per borrower is roughly $38,000. However, the debt amount can be much higher for college graduates who went to private or out-of-state colleges, or had additional years of schooling, like medical school.
Contrary to popular belief, private student loan debt isn’t always forgiven when you die. So who would be on the hook for your debt in the event of your death? The answer is likely your parents, cosigners, or other family members. Life insurance protects you from passing on your student loan debt to your loved ones if you pass away.
One of the biggest financial commitments you will ever make is buying a home. With mortgage debt steadily rising in the U.S., your mortgage could quickly become unaffordable for your partner, or any co-signers if something unexpected happened to you. This is why it is more important than ever to have coverage in case you weren’t able to finish making payments.
A policy that has a term length at least as long as your loan, will provide an adequate amount of money to your intended beneficiary. With these funds, the beneficiary has the chance to keep the home, opening up additional options such as selling it, renting it out, or choosing anything else to do with it.
Another situation where you may need life insurance is when you’re getting married. Spouses often combine finances and debt and take on new expenses together, like a mortgage and raising children. As you prepare for your future together, you should also prepare for any unexpected situations that will affect you both.
If your significant other depends on your income, life insurance can protect them from being in a precarious financial situation should anything happen to you.
There are a handful of instances where new grads may not need to consider life insurance—for instance, you don’t have any significant student debts, you have no dependents, or you’re single. However, even if you don’t need it quite yet, purchasing life insurance should be on your radar once you begin to take on some significant expenses and responsibilities.
If you’re a new grad, term life insurance is likely your best bet. That’s because you can customize the policy around your expenses. For example, if you have a 15-year mortgage, a 15 or 20-year term policy might be best so you can ensure you're covered for the duration of your mortgage if something were to happen to you. Or say you have young children. You can select a term that lasts for the entirety of their education, so their tuition costs would be covered in the event of your passing.
Term is also generally the cheapest life insurance option available. If you’re concerned about life insurance being unaffordable, those fears may be unfounded. 44% of millennials overestimate the cost of life insurance by five times the actual amount.
The biggest benefit to purchasing life insurance early in life is that the earlier you get it, the more affordable it will be. Each year that you put off buying a life insurance policy, the cost of premiums increase by an average of 8-12%. If you’re in good health—your rate will be even better.
At Ethos, we offer accessible and easy solutions to make the life insurance process for college graduates quick and easy. Thanks to our convenient and simple online application form, the entire process takes less than ten minutes. The best part? There are no medical exams required. Simply answer a few health questions on the application, and you can be one of the many applicants that receive same-day coverage. Get started with Ethos today by visiting our site.