Many think of life insurance as a product for those closing in on retirement, or with significant assets and families to protect if they pass away unexpectedly. However, young, and single people can also benefit from life insurance. It can help them build wealth and protect assets if they pass away. Plus, it tends to come with cheaper premiums and easier approvals for younger policyholders.
LIMRA's 2022 Insurance Barometer Study showed that the need for life insurance is high among Gen Z and millennials, with 48% and 47% experiencing a present-day need, respectively. With that in mind, this article will dive into a few reasons young and single people should start looking for life insurance quotes now.
Why young and single people should get life insurance
Here are a few reasons young and single people should consider adding a life insurance policy to their financial plans:
1. They have debt
When someone passes away, their debt goes into their estate. That can leave heirs with more debts to pay off on less income. Getting a life insurance policy provides beneficiaries with funds to pay off the debt, helping them remain financially stable.
2. They can grow their wealth
Permanent life insurance policies — which cover the policyholder for life — come with a cash value growth component. Part of each premium goes into this component, which grows tax-deferred at a specific rate based on the permanent policy type.
Policyholders can withdraw or borrow against their cash value when it's large enough, making it a potential source of wealth. They can also receive the full amount if they withdraw the cash value minus surrender charges. Young people have more time to take advantage of compounding, allowing them to maximize the potential size of their cash values.
3. They can save on premiums while young
Age is one of the primary factors in calculating a policyholder's life insurance premiums. As a result, older policyholders tend to pay more than younger policyholders. However, people who get a life insurance policy at a younger age can lock in lower rates to save money on premiums. This is especially valuable for permanent life insurance policies, given their lifelong coverage.
It's also helpful for policyholders planning to start a family in the future. Premiums will go up if a policyholder increases their death benefit, but they could still be lower than waiting until they have a family.
The bottom line
Younger people may think life insurance is something to consider later in life. But in reality, many young and single individuals could benefit from life insurance. Premiums are more affordable when young, which is great if the policyholder plans to have a family. Plus, they can ensure their debts are handled if they pass away. Additionally, getting a permanent life insurance policy while young maximizes the potential to build cash value. Policyholders should ultimately evaluate their financial circumstances and goals when deciding whether life insurance is right for them and consult with a licensed insurance agent to determine which policy type to get.
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Original Source: Fidelity Life: Do Young and Single People Need Life Insurance