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Should I Get Life Insurance in My 20s?
Now you’ve graduated college and you’re out and about in the real world. This is a period where you should start asking important questions about your future, such as “am I making the right career choices, and even “should I get life insurance in my 20s.” Because we’re all about giving helpful advice where we can–and we’ve been there and bought the t-shirt–we’ve put this handy guide together with three steps you can take right now for your future.
Thinking about your future after college
We know, we know: one minute you're chugging down beers, and the next you're in the real world with bills and responsibility. College is often described as the best years of our lives, but then reality hits. However, the real-world needn't be intimidating–you have plenty of things to be excited about.
While the tender ages of your twenties might not be a time when you want to think about your future too much, doing so can make a significant difference and help put you on the right path to an exciting career and a happy retirement.
Consider a life insurance policy
But… but I thought life insurance was for old people. What do I need a life insurance policy for? I don’t need life insurance, do I? Do I? Wait, should I get life insurance in my 20s? Is that a thing?
It really is a thing, though not that many people know about it, which is because they don’t really understand how life insurance works. But if you want to be an adult like the rich, it’s something to consider right now.
If you take out a permanent life insurance policy, not only are you safeguarding your loved ones if something happens to you but–and perhaps more intriguingly–you can use it as a way to build wealth.
The benefits of permanent life insurance
That's because permanent life insurance has a cash-value element that grows over time. Essentially, this means you can build wealth and access it at some point in your future while you're still alive. So life insurance isn't just about what happens after you pass–it's very much about investing in your future.
Even better, that cash-value aspect is completely tax-free. Unlike most investments, which make you pay tax on your earnings, a permanent life insurance policy doesn't require any payments to the IRS. If you start paying into a perm policy in your 20s and access it around 30 years later, you would have grown a significant nest egg that can be accessed without paying a dime in tax.
It’s also cost-efficient
Not only does it have significant tax benefits that may be even more beneficial than that 401K offered by your new job; it’s also much more cost efficient when you lock in a rate while you’re young. Life insurance premiums are lower the younger and healthier you are, which means more of your savings goes into your cash account to help you get closer to financial freedom.
As a result, it means that a permanent life insurance policy is a great way to invest in your future and ensure that you’re financially sound later in life. Oh, and more thing: because it’s a perm policy, your premium doesn’t change over the years. So you’ll be paying the same premium at 21 as you are at 55, which is great because life insurance premiums increase with age. That’s why you should act now and coverage in your twenties to lock in the cheapest rates.
In conclusion: Should I get life insurance in my 20s?
In our opinion, you absolutely should get life insurance in your 20s. It's a great way to safeguard your future and can give you that little confidence boost after graduating college because you know you've got tax-free wealth to look forward to, no matter what happens on the journey in between.