Yes, You Do Need Life Insurance — Even If You’re Young

It doesn’t occur to many young people to buy life insurance. Most people in their 20s, 30s, or even 40s don’t anticipate needing life insurance, but the unexpected can happen to anyone. If you have people who are depending on you financially — a spouse or partner, children, aging parents or other loved ones — then you need life insurance to help make sure they will be okay if something were to happen to you. Life insurance can also help provide an inheritance for those you leave behind, even if you don’t have a lot of assets.

The best time to get life insurance is when you’re young. By the time you reach your 50s, premiums can become prohibitively expensive. Chances are that when you’re in your 30s or 40s, you’re more likely to have young children, a non-working spouse, or other dependents who won’t stop requiring food, clothes, a roof over their heads, college money, and other support even if you’re no longer there to provide it for them.

Who Will Provide for Your Family When You’re Gone?

If you’re married or have children, or others who are financially dependent on you, you need life insurance — and chances are you don’t have enough. You may have life insurance through your employer, but most employer policies only offer life insurance worth the equivalent of one or two years’ salaries. If you have dependents and a mortgage, you’re going to need a lot more coverage than that to make sure your dependents are protected.

Most experts recommend getting coverage equal to seven to 10 times your annual salary. You should have enough coverage to pay off your mortgage and provide for your family for as many years as it will take your surviving spouse or partner to get back on his or her feet. You should also make sure you have enough coverage to help your surviving loved ones carry out other plans, such as putting the children through college or financing a comfortable retirement for your surviving spouse.

The younger you are when you buy life insurance, the cheaper it will be — but go ahead and wait until you need the coverage. When you’re married, and thinking about starting a family, that’s the time to buy coverage. Talk to an agent to learn about your options regarding life insurance. You may want to choose term life insurance, which covers you for a specific period of time, and is cheaper than whole life or permanent insurance, which will pay a lump sum to your beneficiaries no matter when you die.

Life Insurance Can Be Valuable When You’re Still Alive Too

When most people think of life insurance, they think of coverage that pays their beneficiaries a prearranged sum of money on the event of their death. But life insurance can be useful to you while you’re still alive, too. Life insurance can be an investment vehicle, allowing you to invest your premiums in investment accounts that increase your policy’s cash value.

Your life insurance policy can also be a source of cash if you need to cover medical expenses or long-term care costs. If you become terminally ill, you may be able to sell your policy to get cash to cover your medical bills and related expenses. Or, you may be able to earmark a part of your insurance premiums to cash accumulation, allowing you to build up an emergency reserve of cash that you can use to continue paying your life insurance premiums if you suffer a loss of income. You may even be able to borrow against your life insurance policy’s cash value to cover other expenses that may arise, such as a child’s medical bills.

If you have a non-working spouse or partner, children, or others who are depending on you to pay the bills and put food on the table, you need life insurance. An adequate life insurance policy means you’ll be able to continue providing for your family, even if the worst should happen. Life insurance is the best way to protect your home and your family’s way of life, since it lets you leave your loved ones a cash lump sum even if you don’t yet have that many assets.