It’s difficult to get young adults to think about taking care of their health, much less ponder how their actions will affect them in the future. Not many 25-year-olds are going to decide to buy a life insurance policy without some heavy convincing. It’s difficult to get middle-aged and older folks to buy life insurance policies, much less someone who is barely out of childhood.
With the coronavirus pandemic sweeping the world during the last year and a half, everybody is more worried about their mortality than in the past. Life insurance rates by risk and age are more relevant to discuss than ever before, and we’ll talk about the ways young people can afford to invest in a life insurance policy without hardly any repercussions to their pocketbooks.
What is the purpose of life insurance?
Life insurance is one of the highest growing markets in the insurance industry. It is intended to give a cash payout to your loved ones if you pass away. It makes sure that spouses or children have the means to survive if you were the majority breadwinner in the family.
Insurance companies don’t want to lose money on their life insurance policies, as they are businesses looking to make a profit. Therefore, they are looking for consumers that are the least likely to die. You can guess where this is headed: Young people are the least vulnerable and are the key demographic for an insurer.
Say a person who is 22 years old decides to buy a whole life insurance policy. This means they will pay for the policy until they die. And let’s say they live until they are 80 years old without ever dropping the coverage.
At $10 a month for insurance, that’s $120 a year, and nearly $7,000 in that customer’s lifetime. There are no further costs for the insurance company, creating a scenario where they win tremendously. That’s quite the financial win, right?
Why would a young person be interested in life insurance?
You’re probably wondering why you, a young man or woman, would want to put this type of money toward life insurance after reading the previous paragraphs. There are plenty of great reasons, though.
We already touched on the pandemic, but it is worth bringing up again that more young people are worried about dying during this period. If they are already supporting a spouse and children in this early stage of adulthood and they pass away, there would be a gaping hole in the surviving family members’ bank accounts.
Someone who is only 20 years old and doesn’t have any preexisting conditions will pay on average less than $7 a month for life insurance, but they will get a payout of $50,000-$100,000 in the case of a tragic death. Their family can be taken care of for the price of one fast-food lunch a month. In these dangerous times, it’s worth looking into.
What makes your life insurance more expensive?
Anything that puts you at risk of dying sooner will make your life insurance more expensive. If you are a smoker, you are at risk of lung cancer, heart problems, and strokes. No matter what age you are, if you are someone who uses tobacco, you can expect that life insurance rates are going to be higher than non-smokers or users.
Other conditions that young people commonly have, like Type 1 diabetes, will also be riskier clients for life insurance companies.
If you know about your condition and you do your best to control it, though, there is still reasonably priced life insurance for you on the market. After all, these folks need life insurance more than those who don’t have preexisting conditions.
Shop around for the best rates and you should be good to go protecting your family’s financial future.
Shawn Laib writes and researches for the life insurance comparison site, Clearsurance.com. He takes pride in helping families understand the pros and cons of taking out different insurance policies, such as auto and life insurance.