When you’re fresh out of college and starting out in the adult world, paying off student loans or saving for a condo is probably higher on your list of goals than buying life insurance. But there are plenty of good reasons to give it a place in your financial plan.

Getting covered with life insurance while you’re still young typically means lower rates, more policy choices, and peace of mind that the people you care about are protected from unexpected financial challenges.

If you’ve wondered about whether it makes sense to buy life insurance in your 20s, you’re in good company. According to a 2024 LIMRA study, 49% of people under 25 say they need life insurance.

So do the benefits of getting life insurance at a young age make it worth exploring? Here’s what you need to know about buying life insurance in your 20s.

Do you need life insurance in your 20s?

Before you start shopping, take a moment to figure out whether you actually need a policy. Most 20-somethings would probably say no, but the answer is yes more often than you’d think.

Life insurance is there for the “what-if” moments. It protects anyone who would be affected financially if you died by providing them with a cash payout.

If you have no debts to cover and you’re on a tight budget, it may make sense to wait to look at insurance quotes. But if any of these are true, you may want to consider applying for life insurance:

• You have a family (or want one someday). If you’re married or have kids, life insurance is a must. If you die unexpectedly, the money from a life insurance policy will help them make up for the loss of your income, cover day-to-day expenses like groceries and gas, and pay off any debts. Even if you’re still single, getting covered now can help you lock in lower costs and make sure the protection is there when you need it down the road.
• You have student loans. Investing in an education can help increase your earning power over the course of your career, but it often also means taking on significant debt. 70% of college students graduate with around $30,000 in loans, according to Student Loan Hero. Your family could be on the hook for your school debts if something happens to you. While federal loans are generally forgiven upon death they can leave a big tax bill behind, and many private loan lenders have no death discharge option.
• You have a mortgage. Bought your first home or condo? If you don’t want to pass these bills on after you die, life insurance can help your family pay for them later. The same goes for auto loans, credit card bills, or other unsecured debt.
• You want a way to cover your final expenses. Funerals can be expensive, with the average one costing $10,000 or more. It may seem too far in the future to worry about, but anything can happen, and it’s never too soon to have a plan that will avoid putting a financial strain on the people you love.

Benefits of life insurance for young adults

When you’re just starting out, life insurance can take a backseat to other financial priorities. But there are good reasons to buy life insurance young:

• It’s cheaper. In general, life insurance policies are much less expensive than people expect. In fact, 50% of Millennials overestimate the average cost of a term life plan by up to 500%. That said, rates will always be better when you’re young and healthy. At Fidelity Life, a healthy 27-year old man can get a 30-year term life insurance policy with $250,000 in coverage starting around $29 a month – and that cost can be even less per month if you decide to pay annually.
• Your health matters. Health issues are more likely to come up later in life, and can make qualifying for life insurance more expensive or even prevent you from buying. But if you lock yourself into a policy early, you can’t be refused coverage for any health reasons that arise down the road.
• Protection against job loss. As of October 2020, 12.6 million (7.9% of the workforce) Americans are still out of a job during COVID-19. Gallup also reports that 21% of millennials have changed jobs within the last year. Considering these circumstances, many people are likely facing losing their coverage from their employer-provided group life plans. Unlike most employer-provided group life plans, however, an individual policy will stay with you through any job. Even if you’re temporarily unemployed, it’s still possible to buy life insurance coverage.

What type of life insurance do young adults need?

For most 20-somethings, term life insurance is the way to go.

Term life offers flexible protection for a specific period of time at affordable rates. You can choose a term length, typically 10 to 30 years, and a coverage amount that works best for you. In your 20s, it often makes sense to lock in a 30-year policy so you’re not stuck having to buy again later when you still need coverage.

In some cases, however, permanent life may make more sense.

Permanent life gives you lifelong coverage, offers higher coverage amounts, and can come with an extra cash value component. While it tends to cost more than term life, you can have peace of mind knowing that you’ll always have that protection on hand if you have lifelong needs, like a child with disabilities.

Still have questions about coverage?

Fidelity Life can walk you through the process. Get in touch to talk with one of our agents or shop for online  life insurance quotes today.

At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.