When should you get life insurance?

Purchasing life insurance in your 20s and 30s may not be top of mind; you’re probably focused on paying off student loan debts or meeting basic daily expenses. But it still may be something you want to consider adding to your financial strategy. In fact, a 2022 survey conducted by New York Life Wealth Watch found that Gen Zers (53%) and millennials (47%) are the generations most likely to plan on making changes to their investment portfolio or strategy. The same study also revealed that women and Gen Xers felt less financially confident than other demographic cohorts.1

Two women looking at object in a store

Benefits of getting life insurance as a young adult.

Life insurance for young people is a particularly good idea if you have dependents who rely on your income, you have a lot of debt, or you want to lock in lower premiums while you’re young and generally healthy. If you are younger when you buy your policy, you may qualify for lower premiums. You can lock in those lower rates now to give yourself the peace of mind that comes with knowing that your loved ones have a financial safety net.

Is it worth getting life insurance in your 20s?

The need for life insurance is high among Gen Z, with only 34% reporting that they have coverage.2 When it comes to millennials, 55% have no life insurance coverage at all, and 45% don’t believe they have enough life insurance, or think they would not qualify for coverage.3 So, the sooner you get life insurance, the better for you and your loved ones, and the less likely you are to put them at risk of financial hardship should you die unexpectedly.

Why get life insurance as a young adult?

If you’re still looking for reasons why you should get life insurance, here are some scenarios where life insurance can help:

It can protect those who rely on you financially.

If you have a spouse, partner, child, parent, sibling, or business partner who relies on you financially, life insurance can help protect that person.

It can help pay for life’s expenses.

Do you have a family, or are you planning on having a family? Life insurance can cover your family’s living expenses and debts. Life insurance can also protect others from financial burdens that may result from your passing. Even if you have a great job with good benefits, it’s still a good idea to consider life insurance. Employer-sponsored plans offer basic group insurance coverage, but that may not be enough to cover all your needs.

The earlier you buy the better.

Life insurance purchased today can also protect your future insurability. And the younger and healthier you are when you purchase insurance, the less expensive it will generally be.

It can help you not pass on debt to your loved ones.

Do you have significant debt? Life insurance can make sure that student loan debt, mortgages, and any other large debts are not passed on to the loved ones you leave behind. While federal student loans are discharged when you pass away, private loans are not.

It can cover final expenses.

While you may not have to worry about final expenses for years to come, we all know how important it is to prepare for the unexpected. Life insurance can cover funeral costs, so your loved ones won’t have to.

It can grow over time.

Even if you think none of these instances apply to you, permanent life insurance can be a great way to start building a cash value to pass on to the next generation or to be accessed later in life to help purchase a home or supplement retirement income.

Life insurance options for young adults.

Two categories of life insurance are term life and permanent life (or whole life). Both options can provide financial protection when your loved ones need it most, and offers versatility with riders that you can use to customize your protection. Term life insurance is coverage for a specific period of time—typically, you can choose periods of one, 10, 15, or even 20 years. It offers a death benefit, and in most cases the premiums you pay will either stay level or increase at predetermined intervals.

  • Term life insurance allows you to obtain valuable death benefit protection4 at a cost that’s typically less than for permanent life insurance because it does not have a cash value, giving your loved ones financial security if something happens to you. Term life insurance offers valuable flexibility; most policies allow you to convert to permanent life insurance as your needs evolve.
  • Permanent life insurance is protection for your whole life, not just for a limited period of time. In addition, most permanent life insurance policies include a savings component in which you can build assets known as cash value. Over time, as you pay your premiums, your policy’s cash value will grow. Eventually, your cash value may become a valuable asset that you can tap into as your insurance needs and priorities change.5 Permanent life insurance typically costs more than term life for the same level of protection, because of the additional cash value benefit it provides..

After weighing all the benefits of life insurance and considering what type of insurance will work best for you, you can contact a New York Life agent to help you get started. During your first meeting, you will share information about your and your family’s financial goals and needs, and you will have the opportunity to ask any questions about policies and coverage. New York Life’s financial professionals have the knowledge to provide guidance to help you make the best choices, including offering ways you can adjust your coverage should your needs change in the future.

Related Articles 

Want to learn more about life insurance?

A New York Life financial professional can help determine what’s right for you.

1“New York Life Wealth Watch 2023 Outlook: Individuals Hopeful about Finances, Despite Inflation, Recession Concerns,” NewYorkLife.com, January 18, 2023. New York Life Wealth Watch 2023 outlook: 1-in-3 individuals hopeful about finances in 2023, despite inflation, recession concerns.

2Veronica Gordon, “I’m Gen Z … Do I Need Life Insurance?” Life Happens, November 4, 2022. https://lifehappens.org/blog/im-gen-z-do-i-need-life-insurance/.

3“It’s Time to Help Get More Millennials Insured,” LIMRA, July 6, 2022. https://www.limra.com/en/newsroom/industry-trends/2022/millennials-its-time-to-get-insured/

4Term life insurance rates are lower than those of permanent policies, because term life provides temporary coverage, it does not build cash value, and its premiums may increase as you age.

5Keep in mind that accessing the policy’s cash value will reduce the available cash surrender value and death benefit.