If you are in your 20s or 30s, chances are that you may not have thought about getting life insurance. However, even for young adults, life insurance can provide good peace of mind that your loved ones are supported should you pass away.

You may be wondering what type of policy is right for you, and whether you need cover at all. The good news is that there are many options available to you. In this guide, we'll help explain why young people shouldn't put off getting life insurance when needed.

Why do young adults need life insurance?

Life insurance is often something that people put off until later in life, however, it doesn't make sense to wait until you're old to protect yourself financially. You could end up paying much more money in premiums over the long term.

The main reason for taking out life insurance is that it can provide for your family or loved ones if something happens to you. It can ensure your loved ones have enough funds available to pay any debts or bills, so they don't fall into arrears.

The money can provide financial security for your loved ones, helping them with various finances, such as:

  • Mortgage repayments

  • Living costs

  • Household bills

  • Childcare support

  • Funeral expenses

It's important to note that a life insurance policy will not replace your income; however, it can help to ease the burden on your family if you were to die unexpectedly. If you have children, you may want to leave an inheritance fund for them. This way, they won't have to worry about how they'll manage without their parent's income.

You may also want to check out our Millennials guide to life insurance.

How does life insurance work?

A life insurance policy is an agreement between you and your chosen insurance provider. Upon your death, the policy pays out a cash lump sum, which can be used to cover various payments, such as a mortgage, household bills and funeral expenses.

Each month you pay a monthly premium, which varies depending on how much coverage you want. You are required to continue making payments in order to remain covered. If you stop paying, then you lose your protection.

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Why some young adults don't buy life insurance

When you're young, the future isn't usually your main priority. You might be focused on university, work, and maybe even a relationship. But as you get older, it's important to start thinking about what will happen when you die.

Everyone has different circumstances in life, as well as the paths they take. For example, some of us might not find love until later in life, which could result in needing life insurance at a later stage. Other young people may already be married or in a long-term relationship, at which life cover provides peace of mind that their spouse is taken care of, at least financially, if they pass away.

Here are some reasons why young people may avoid buying life insurance:

  • They think they're too young - the majority of young people often see life insurance as something you buy when you're older to protect your family. The truth is there's never a bad time to buy life insurance if you have dependents.
  • They're unsure about their future -not all young adults want to get married or have kids. Others can simply be unsure about what they want from life.
  • They see life insurance as a long-term commitment - at such an early stage in life, many young adults can be put off making commitments, as their circumstances could soon change. You don't want to take out a policy, only to later realise you no longer need it.
  • They don't have anything worth protecting -many young adults won't have dependents or financial commitments, such as a mortgage. This can leave them with very little reason to take out a policy.

What type of life insurance should young adults get?

There are two types of life insurance policies: Term and Whole. Both offer different benefits, but each comes with its own set of pros and cons.

Term life insurance - This type of policy offers limited protection in which you are protected for a set period of time. The policy pays out, providing you die within the policy term. Because you may outlive the policy, term life insurance is usually one of the cheapest options available.

Whole life insurance - With this type of policy, you are protected for life. It doesn't expire, so you don't need to worry about renewal dates. It provides a fixed lump sum as well as fixed premiums, this means your premiums won't rise even as you get older. However, permanent policies also cost more than term plans, and depending on the level of cover, it is sometimes possible to pay in more than you receive back.

You can also apply for a joint life insurance policy. This type of cover protects two people under a single policy. It is ideal for couples who share an income, as well as other finances, such as a mortgage.

Joint policies typically pay out after the first death in the couple. The surviving person then has enough money to help cover various finances.

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At what age should you buy life insurance?

Young adults are often unsure whether to purchase term life insurance or whole life insurance. And, because young adults typically have lower incomes than older generations, they may struggle to afford premiums.

In short, there's no bad time to buy life insurance, it can help ensure your loved ones are financially protected regardless of where you are in life. In general, cover will be cheaper while you’re young and healthy, so it’s important to look into it as soon as possible.

It's also important that you choose the right kind of policy for your needs.

Is life insurance cheaper for young adults?

Life insurance is generally cheaper for young people, as they are less likely to have health conditions associated with aging. Therefore, it is less likely a claim will be made early into the policy term. There are a number of factors that can affect the cost of your life insurance policy:

  • Your age -Life insurance premiums increase as you grow older. So if you're younger, you'll likely save money on premiums. However, if you're older, you could end up paying a higher premium, as there is a greater chance of a claim being made.
  • Your health -If you're healthy, then you can expect to pay lower premiums than someone who smokes or drinks heavily. You'll be asked to answer some basic health and lifestyle questions in which you are required to disclose any medical conditions. You may also need to complete a health exam if you have a family history of illness.
  • The amount of cover you need - It's best to buy enough life insurance to meet your needs. If you're single and childless, and don’t have a mortgage, you probably don't need life insurance. However, if you've got dependents, you'll need to decide how much cover you need. Obviously speaking, the more coverage you buy, the higher your monthly premium will be.

Can you be turned down for life insurance?

Your insurer has the right to refuse your insurance application if they believe you're at risk of making a claim. You’ll have to complete an application form including details of your health history, and some insurers may request you to go through a nurse screening or a GP report before starting a policy. This process is called underwriting.

This is done to ensure that they have a good idea of your situation and can provide an accurate premium. Pre-existing conditions can sometimes cause an increase in your monthly premiums, and in the worst case, your insurer could decline cover altogether. Learn more about applying for life cover with a pre-existing condition.

If you do pass the medical check, you'll usually receive a letter confirming that you were accepted onto the policy. At this point, you may need to provide proof of identity and address. You'll also need to sign a form stating that you understand the terms and conditions of the policy.

If you're looking to buy life insurance, you can apply for an online life insurance quote. Simply fill out some basic details, as well as what type of cover you want, and we'll present you with quotes from leading providers in minutes!

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Our team of friendly and professional advisers are on hand to help with any questions you may have regarding Life Insurance.

The advisers can also make recommendations tailored to your current situation and will research the market on your behalf, ensuring you secure the cover you need and supporting you every step of the way. 

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