Life Insurance

The Importance Of Getting Life Insurance In Your 20s

Sep 4, 2020
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The years between 20 and 30 can be a momentous time for many. You might finish school, live on your own for the first time, have children, get married, and buy a house—all within the span of ten years.

With these pivotal events come expenses like student loans, mortgages, childcare costs, and more people that rely on you and your income. By purchasing life insurance in your 20s, you can take an essential step in the right direction towards strengthening your financial future.

If you’re reading this and thinking that life insurance isn’t necessary until later in life, hear us out—if you’re in your 20s, now might be the perfect time to consider life insurance. Here’s why.

Why you might need life insurance in your 20s

As we covered above, your 20s could be a decade where you take on some significant expenses. Life insurance offers protection for your loved ones having to shoulder the burden of your expenses in the event of your death. Here’s an example. Say you just purchased a home, and took out a mortgage with a 15-year term. A 20-year term life insurance policy for the balance of your mortgage can ensure that your mortgage payments are still made, should you pass away.

Student loans are an especially common financial obligation for many twenty-somethings. What you may not realize is that private student loan debt is not forgiven for any reason—including passing away. If you pass away, your private student loan debt will be delegated to the co-signer of the loans or your spouse (Note: federal aid is forgiven if someone passes away). If you have private student loans, a life insurance policy for the amount of your loan debt can protect your loved ones from taking on this financial obligation in the event of your untimely death.

Here’s a real-world example from Ethos employee, Erica. In Erica’s case, she was worried about burdening her mom with her student loan debt. As a 27-year-old with no spouse or children, Erica is not what people typically think of when picturing someone who needs life insurance. Erica was initially worried that covering her debt would cost her too much, but after looking into term life insurance with Ethos, she realized she could get a 10-year policy covering her for $100K at only $9 a month.

Why you might not need life insurance in your 20s

It is also important to note that, in some cases, life insurance might not be an immediate need for 20-30-year-olds. If you are single with no dependents (including your parents and grandparents) and no significant debts like student loans or a mortgage, you can likely hold off on purchasing life insurance. However, even if you do not need it quite yet, purchasing life insurance should be on your radar once you begin to take on some significant expenses and responsibilities.

Benefits of getting life insurance in your 20s

The most significant benefit of purchasing life insurance in your 20s is this: the earlier in your life you get it, the more affordable it will be. If you are also healthy, that is even better. Life insurance gets more expensive the longer you wait (8-12% every year). It is better to act now while you are young, rather than delaying until later in life—when it will inevitably be more expensive.

One of the biggest barriers to young people getting life insurance coverage now is that many overestimate the cost and difficulty of obtaining life insurance. Life insurance is more affordable and less intimidating than many people make it out to be. According to our Financial Legacy Index, 33% think life insurance is not affordable, and 24% think it is challenging to get. However, the 2018 LIMRA Insurance Barometer Study found that 44% of millennials overestimate the cost of life insurance by five times the actual amount. Many millennials can get enough coverage to protect their family’s financial future for the cost of one or two restaurant meals per month.

What type of coverage should people in their 20s get? We’re glad you asked. For most millennials, term life insurance is the way to go. Term life insurance is the most affordable and straightforward type of life insurance and allows for policy customization to offer protection when you need it the most. We covered this above with an example of how term life insurance can be tailored around a mortgage term, but other common timelines for term policies can include: until your children finish school, you retire, or you finish paying off a loan.

How Ethos makes life insurance easy

Ethos offers easy, affordable life insurance that can be purchased entirely online–no need to leave your house. You can protect your family's future in minutes without having to talk to an agent (unless you want to)—all from the comfort of your couch.

How does it work? Ethos streamlined the process to bring you a quick, online application. Thanks to the power of predictive analytics, Ethos can provide a personalized estimate in a few seconds. We analyze the information you provide against our wide range of products in real-time, matching you to a policy that fits your needs with a price that works for you. For more information on how our process works, read more here.

You’re just a quick and easy process away from having the peace of mind of knowing that your family’s future is protected.

The bottom line on life insurance in your 20s

Life insurance is an essential part of your financial legacy. While most Americans (82%) value establishing a strong financial legacy, many people (38%) lack confidence they will leave one behind. By setting up life insurance in your 20s, you can take an essential step in the right direction towards solidifying your financial future. Additionally, if you can lock in an inexpensive policy early on in life, you can choose to add additional policies as your needs change over time.

So, while life insurance may not be on your radar in your 20s, know that it is an ideal time to start thinking about it. The benefits of purchasing life insurance early on in life and locking in the best rate far outweigh the financial obligations. Ethos makes life insurance more affordable and less intimidating than you think. Click here to get started today.

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