Life insurance is probably not something you plan on thinking about until you get married and start a family. After all, your post-grad list of to-dos includes more urgent matters such as paying off student-loans, finding a job and navigating your way in the world of “adulting”.
However, the idea that life insurance should wait until you’re older and more established is a common misconception in our world today. Many recent grads are now realizing the long-term benefits of acquiring life insurance when they are young, healthy and single. Consider our top 2 reasons below to see if life insurance is something that should be included in your financial plan.
1. You’ll save money
Simply put, signing up for life insurance now will cost you less money than signing up when you are older. Once you purchase a life insurance policy you will pay a monthly “premium”. A “premium” is the price you pay for as long as your insurance is in effect and will not change over time*. Your premium is based on factors such as age and health.
As a young and healthy person, you’re very low risk for insurance companies which means your premium will be a lot less. In fact, a healthy, 30-year old non-smoker can get $250,000 10-year term life coverage for roughly $13 a month with preferred non-smoking rates. Or just three Grande size drinks at your local Starbucks! There are easy to use Premium Calculators available online which can tell you exactly how much you will pay each month.
Since you will most likely be purchasing life insurance at some point in your life, you will save a lot of money by locking in a lower rate while you’re young. Planning this far an advance may seem impossible right now (especially when you don’t even know what you’re having for dinner tonight) but, your future self will thank you!
2. You are protecting your loved ones
Whether it’s a student loan, car loan or credit card debt, chances are you have acquired some type of debt at this point in your life. Nowadays, a typical 25-year-old owes an average balance of $21,000 in debt. If something unexpected happens to you that debt will not disappear. Your parents, spouse or family members may be responsible for any outstanding financial obligation. While life changes are emotionally devastating, they don’t have to be financially devastating to your loved ones.
Protect your family from the burden of repaying your debt if something were to happen to you. With life insurance, instead of focusing on paying off your student loans, they can now focus on what to do with the adorable dog you left behind (aka: “your child”).
As a recent graduate and “young adult” there is a laundry list of responsibilities and changes that are thrown at you at an alarming pace and it may feel overwhelming. With life insurance, you can rest a little easier knowing that your future-self, family, and future-family (including your dog) are protected. And, if you are now considering life insurance as a part of your overall financial plan, be sure to take advantage of free online calculators that can help determine how much coverage you need and what is will cost you.
For more information about life insurance from your Alumni Association available through The Alumni Insurance Program, click here.
*For Level Term Life insurance plans. Your premium remains the same during the length of the term (10, 20, etc.) as long as you pay your premiums.