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The Math Behind Getting Life Insurance in Your 20s or 30s

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As a young person in your 20s or 30s, there are things you’ll probably not be thinking about—like getting life insurance. Think of it: Why should you even bother about something like this when you’re still full of life and vigor? 

And you’re correct from a standpoint. 

But death isn’t planned. In the case of such unexpected events, life insurance coverage can help lessen the burden on your family members. And if you have unpaid debt, your cosigner doesn’t have to regret signing for you since your life insurance can cover your debt. 

Now, if you’re ready to secure your future and protect your loved ones, take the first step today by reaching out to Lake Region Agency. Our experienced team can help you find the perfect life insurance policy tailored to your needs. Don’t wait until it’s too late, contact us today and take a step to ensure peace of mind for you and your family.


The Logic Behind Getting Life Insurance at an Early Age

Honestly, there’s no science here. You only have to see it as a backup investment against the unexpected.

To help drive home this mindset, here are the life insurance statistics of those within 20 to 30 years. 

Life Insurance Stats of Younger Individuals

We can agree that most people between 20 and 30 years old are students.

As of March 2023, the U.S. student loan debt totaled over $1.78 trillion. According to this report on NerdWallet, those between the ages of 25 and 34 are most likely to have student loan debt.

While 92% of this debt is federally owned and can be waived on account of death, 8.2% ($146.9 billion) of it is private loans. And guess what: Half of the private lenders pass on a person’s debt to their cosigner, next of kin, or other family members when they die. 

But what percentage of this age group is getting life insurance? 

This LIMRA’s 2022 study barometer shows that 34% of individuals aged 18 to 24 years have life insurance. It also states that millennials (25 to 40 years) make up the highest number of individuals needing life insurance. 

Why You Need Life Insurance at an Early Age 

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We can go on providing data on debt rates and insurance claims, but below are a few reasons you should be getting life insurance while you’re young.

  • Younger Is Cheaper: The cost of life insurance premiums depends on several factors, like age. Younger people statistically have a lower chance of dying than older people; thus, their life insurance premiums are cheaper. 
  • A Form of Investment: As we stated in the opening statement of this section, life insurance can be an investment. Consider it as gathering cash value in your 20s; before you’re old and gray, you should have saved a tangible sum for yourself, heirs, or beneficiaries. 
  • Death Benefits: In the event of sudden death, your family or beneficiaries get your life insurance benefits. This will be invaluable in settling burial costs or paying any debts you owe. 


What Type of Life Insurance Should You Get in Your 20s or 30s?

There are two types of life insurance, and knowing which is best for your situation can be tricky. In this case, you’ll have better chances if you contact a reliable insurance agency for help, such as the Lake Region Agency

Getting Life Insurance - Businessman Insurance Policy Risk Assessment Concept

Now, let’s see both types of life insurance.

1. Term Life Insurance 

This category of insurance provides coverage for a specific period. For instance, term life insurance might offer $250,000 for 20 years of coverage at $25 monthly. If the insured person passes away during this period, their beneficiaries receive the death benefit. 

However, there’s no payout if the insured is alive during the expiration period. The policy ends unless it’s renewed or converted to a different type of policy. 

Here are the types of term life policies: 

  • Level Term (or Level-Premium) Insurance
  • Annual Renewable Term (ART)
  • Decreasing Term Insurance
  • Increasing Term Insurance
  • Convertible Term Insurance
  • Return of Premium Term Insurance
  • Group Term Life Insurance policy

2. Permanent Life Insurance 

Permanent life insurance policies provide coverage for the entire lifetime of the insured individual. It doesn’t expire as long as you pay your premiums. 

The several types of permanent coverage include:

  • Whole Life Insurance
  • Universal Life Insurance
  • Variable Life Insurance
  • Indexed Universal Life Insurance

While this insurance coverage charges high premiums (usually hundreds of dollars monthly), it offers a cash value component. 

What Is Cash Value? 

As you pay premiums, part is kept as cash value and grows tax-deferred. This can build a savings component you can borrow from in circumstances like home purchases, weddings, or even holiday trips. 

Term Life or Permanent Life Insurance: Which Is Best?

There’s no right or wrong choice, but assessing your financial situation and needs can help you know what’s best. 

For instance, you can consider a term life policy if you don’t earn much income monthly and have little to put away. You can expect to pay between $20 and $30 monthly, and the death benefits are still reasonable. 

But, if you can, consider getting a permanent policy. Its benefits, including the cash value function, can be valuable even while you’re alive. 


Is It Too Early to Buy Life Insurance In Your 20s or 30s?

Getting life insurance in your 20s or 30s is a good call—it’s not too early. Weighing the benefits of getting it early, from paying lower premiums to investment gains, you’ll probably miss out if you don’t get one soon. 

Don’t know where to start? Let’s help you find your way. Request a free quote today, and we’ll reach out immediately.

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