A life insurance policy protects your loved ones after you die. When you are alive, you will pay your term life insurance premium each month. After you pass away, the life insurers will write a check to your beneficiaries — typically your spouse, children, or parents. These costs can be used to cover a variety of expenses or ensure your dependents have a source of funds in your death. You are never too young to take out death benefits. Here are a few top reasons to get a life insurance policy.
Life insurance is cheaper when you’re young.
Life insurers want to mitigate risk. This means they are more likely to insure people who are young and healthy over older Americans and people who have illnesses. If you are in your twenties or thirties, you can save money by signing up for term life insurance and enjoy a lower monthly cost.
If you are older, then you can still get a term life insurance policy. However, the application process may be more involved. Insurers want to do their due diligence to make sure you are in good health. They may want copies of your medical records and may adjust the amount of coverage you can receive. If you are worried about getting life insurance, browse term life insurance quotes to find an affordable option for your specific needs.
Life insurance covers medical bills and funeral expenses.
A common myth about term life insurance is that it’s only needed if you have kids or a significant other who you support financially. However, your policy can be used to cover any outstanding bills or debts you have when you die. If you have a car payment or student loans (especially loans that have co-signers), your beneficiaries will be responsible for these costs after you pass away. They don’t just inherit your assets, they also take on your debts.
Young people often start paying insurance premiums early on to cover potential hospital bills and funeral costs. In 2021, the average funeral can cost between $12,000 and $7,000. These charges include fees for embalming or cremation, transportation of remains, and the funeral event costs.
No one plans to die young. However, by opting for an American Life Fund viatical settlement or a similar insurance policy, you can protect your family if you become terminally ill and accrue a significant amount of medical and funerary debt.
You can choose a term that works with your needs.
Life insurance policies have different lengths, typically for 10, 20, or 30 years. While there are some whole life insurance policies on the market, young people typically opt for set term premiums.
If you don’t have kids but recently took on a mortgage with your partner, you may want to take out a term life policy that aligns with your mortgage length. For example, if you took out a 30-year mortgage, then you can have a life insurance policy that lasts until your property is paid off. If something happens to you, your partner will have your death benefits to pay off the house. Ask about the different premiums for term life insurance policies. You may pay more or less depending on the length of the plan.
It may seem morbid to talk about death benefits, especially when you are young and healthy. However, the best time to review premiums and consider home life insurance is when you are too young to need it. While the brokers you work with hope you live a long life, they want to make sure you and your loved ones are prepared in the event of an emergency or tragedy.