By Mike Elman
When you are a young adult, you may think your career is the main path to financial security. With financial needs evolving over time, one way young adults may be able to secure their financial future is through life insurance.
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What are permanent and term life insurance?
Life insurance is a financial tool that may help protect your family in the event of your passing. Two primary types of life insurance are permanent and term.
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Permanent life insurance stays with you as you grow.
Permanent life insurance, sometimes known as whole life, offers lifetime coverage and can include added benefits and features that may become part of your financial plan, such as a cash value feature.
Permanent life insurance policies may become more expensive as you age. Permanent life insurance may also be too costly for young adults just starting out in their careers but might be an option for those who want to build cash value in their life insurance product.
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Term life insurance covers you for a predetermined term.
Term life insurance is purchased for a specific time limit or pre-defined term, such as a certain number of years.1 The policy pays money to named beneficiaries, the person named to receive the death benefit in the policy, if the insured dies during the coverage term.
Term life insurance may be more affordable when you are younger. This type of insurance is intended to provide lower-cost coverage for a specified time period.
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The benefits of life insurance for young adults.
Young adults who choose to purchase life insurance can experience some of these benefits:
- replacement of lost income if the primary earner were to pass away
- payment toward outstanding debts
- coverage for funeral and other final expense costs
- care for a loved one or family members
- the ability to leave money to a favorite charity
We now know a little bit more about permanent and term life insurance and ways they may be able to help you and your family. Let’s discuss term life insurance and explore some things to consider before purchasing.
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When should young adults consider buying term life insurance?
The decision to purchase term life insurance involves several lifestyle factors.
- Age: Term life insurance offers flexibility and can vary from 10, 15, 25, or more years, allowing you to select the length of your policy based on your current circumstances and make adjustments later.
- Health: Current and past health conditions, as well as factors including age, gender, and weight, may influence the cost and your ability to get a life insurance policy.
- Marital status: If you are single, you may need less insurance. If you are married, you may need to consider the income needs of your partner as well as any joint debt or financial investments.
- Family status: If you have children, you may have considerations such as college funds, school tuition (for private school), and child care.
- Financial plan: If you choose to include life insurance as part of your financial plan and long-term goals, you may want to use insurance products to help cover debts, provide additional income, and use them for future goals.
This list of considerations is not exhaustive. You know your personal/financial needs best. Speaking with a licensed insurance professional can also help clarify your future needs.
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Term life insurance may be advantageous for young adults.
Once you own assets and have others who count on you, you may want to consider purchasing term life insurance. Term life insurance can be an important part of helping protect your family and assets and can be part of your future financial planning strategy.
Purchasing term life insurance may bring you ease and protection, knowing you have helped prepare for the future and the unexpected.
For more information about life insurance, contact one of our knowledgeable agents at 713.254.3439 or email us at [email protected].
Sources:
1. National Association of Insurance Commissioners, Term Life Insurance, 2020, https://content.naic.org/cipr_topics/topic_life_insurance.htm
