Best Life Insurance for Young Adults

Purchasing life insurance may not be the first item on your to-do list when you’re in your 20s and 30s. Even so, now may be the best time in your life to buy it. Premiums are typically lower for young adults than older ones, potentially making it more affordable to keep yourself covered through the years.

Start looking for the best life insurance for young adults by reviewing the guide below. It covers durations, premium structures, cash value components and everything else you need to know to find your ideal policy if you’re between 18 and your mid-30s.

Our Top Picks for Best Life Insurance for Young Adults

• MassMutual - Best whole life insurance for young adults
• Lincoln Financial Group - Best term life insurance for young adults
• Nationwide - Best universal life insurance for young adults
• New York Life - Best permanent life insurance for young adults
• Pacific Life - Best life insurance for students

Best Life Insurance for Young Adults Reviews

Why we chose it: MassMutual's whole life insurance grows in value over time and boasts consistent dividend payments to policyholders, often used to pay premiums and purchase additional life insurance coverage.

MassMutual whole life insurance builds cash value over time through interest and dividend payments. This can increase the policy's value to your beneficiaries without you having to put in any additional money. While dividends aren't guaranteed, MassMutual says it has consistently paid them out since the 1800s. Plus, if you ever need to access the cash value of your life insurance policy to cover a present-day expense, you can do so at any time. (But keep in mind there can be drawbacks to this move.)

MassMutual also has strong financial health ratings. This means young adults can confidently purchase a whole life policy without worrying about the company's ability to pay future claims, which is important as you will likely be counting on your permanent life insurance policy for the rest of your life. Additionally, MassMutual's onboarding process allows you to speak with a financial expert who can advise you on your life insurance purchase based on your goals: helpful for young adults who aren't entirely sure what they want in a policy.

One downside to MassMutual is its lack of onboarding convenience. There's no way to buy a whole life insurance policy quickly online, so you have to speak to a representative. The company also only offers customer service over the phone during standard Eastern Time Zone business hours, which could be a problem for West Coast customers.

Why we chose it: Through Lincoln TermAccel, Lincoln Financial Group offers a quick, electronic onboarding experience for its term life insurance. New customers can get a new policy within two days.

Lincoln’s speedy onboarding process will likely appeal to young adults who want to take care of their life insurance needs fast. The company's term life policies offer flexible term lengths and allow you to convert your temporary coverage into a permanent life insurance policy.

You also have the option of renewing your term life coverage when the current one expires. The face value of the policy will decrease if you choose to do this.

Lincoln has life insurance plans with up to $2.5 million in protection through LincolnTermAccel. Regardless of the policy you choose, you also get access to live chat support during certain hours, which should make getting assistance easier when needed.

That said, there are also some drawbacks to consider. Lincoln’s term life policies are unavailable in New York. Lincoln TermAccel also only offers three supplemental riders: accelerated benefits, children's level term and waiver of premium. Other companies may have riders for chronic care expenses, living benefits and accidental deaths.

One last item to note is that you'll only be able to pay your premium annually or semiannually, as Lincoln Financial doesn't offer a monthly direct billing option. It charges a fee for paying premiums more than once annually.

Why we chose it: Nationwide offers flexible universal life insurance policies you can borrow from if needed.

With Nationwide’s universal life policies, you can customize your protection level, how often you pay your premium and how much that premium is (as long as you stay within set boundaries, that is). This can make it easier to set up your ideal life insurance plan from day one, then change it as you age and your needs evolve.

These policies also come with other features, including the ability to increase cash value over time and combine your coverage with a spouse’s through the company’s survivorship universal life policy. You can also use your policy to pay for long-term care while alive.

One downside is that Nationwide doesn’t offer online quotes or a digital life insurance application. It also only lets you invest your policy's cash value if you choose a variable universal life policy. That may not work for you, as variable policies can have fluctuating premiums over time.

Why we chose it: New York Life offers custom-built permanent life insurance policies with solid customer satisfaction rates.

As a young adult, pre-built policies may not always fulfill your life insurance needs. That's not an issue at New York Life, which allows you to personalize your life insurance policy (the company also offers traditional permanent life insurance policies if that's what you prefer). You can customize these with optional riders, such as disability waiver of premium, chronic care coverage and living benefits.

New York Life also performed better than average in the latest J.D. Power polls for customer satisfaction in the life insurance industry. Plus, as a policyholder, you'll be eligible to earn dividends from New York Life, which can help to increase the cash value of your policy over time.

You won't be able to get an online quote from New York Life, which can increase the time it takes to activate your policy. The company also says it may take as long as 10 business days to process a claim. Other providers, like Mutual of Omaha, claim to pay most claims within 24 hours.

Why we chose it: Pacific Life offers financial flexibility that students will appreciate, including premium payments you can match to your preferences and the freedom to make withdrawals.

Students can purchase most kinds of life insurance from Pacific Life, including term, variable universal, universal and indexed universal — each of which has unique features related to cash value accrual and premiums.

Another attractive feature for students is Pacific Life's policy customizability. You can withdraw and take out loans from your policy's cash value. Some of the company's products also have flexible premiums, so you can pay less (within limits) when money is tight.

The company also has customer support available over the phone as early as 3 a.m. ET, making it easier for students who keep odd hours to get assistance choosing a policy.

However, the company's online offerings leave a little to be desired. Pacific Life has no live chat support, nor can you get a quote online. This can add time to your life insurance shopping process.

Other life insurance for young adults we considered

Our analysis of the best life insurance companies covered more providers than the ones listed above. While these three didn't make the list above, they still have some qualities worth mentioning.

Brighthouse Financial

Brighthouse Financial offers several life insurance products with some solid features like coverage for long-term care and guaranteed payments. Unfortunately, it performed below average in the latest J.D. Power poll for individual life insurance satisfaction.

Transamerica

Transamerica has a diverse array of life insurance products with some nice features like no medical exam requirement for certain applicants. However, it’s another company that performed below average on J.D. Power’s latest life insurance satisfaction poll.

Mutual of Omaha

Mutual of Omaha has great customer satisfaction ratings, but it doesn’t offer whole life insurance plans to young adults, limiting its overall appeal.

Life Insurance for Young Adults Guide

As a young adult, you're likely shopping for life insurance for the first time. Whether you need life insurance for beginners or already have some knowledge under your belt, make sure to educate yourself before finalizing such an important decision.

How does life insurance work for young adults?

Life insurance for young adults works the same as for older ones: You generally pay a premium toward a policy that pays money to your beneficiaries when you die. The policy may also pay in other situations, such as if you require long-term care.

However, the considerations to keep in mind while choosing a life insurance policy can be different for young adults. For example, you may need to research term life insurance companies with longer-than-average plans to keep your family covered through the rest of your working years.

The specific types of coverage, your ability to access the funds in your life insurance policy and the terms you must abide by to keep the policy active can all vary based on the type of life insurance you choose and your provider. Shopping around and requesting quotes from multiple providers before finalizing your decision is essential.

Is life insurance cheaper for young adults?

In general, younger people qualify for cheaper premiums, so long as you're healthy. Life insurance policies for young adults tend to be less risky for providers, as age is a significant predictor of mortality.

That said, this also depends on the policy and provider you choose. If you add optional riders to your plan, you may not save money even if you find the cheapest term life insurance policy on the market.

How to buy life insurance as a young adult

The first time you look for life insurance can be overwhelming. You may wonder which provider you should choose or how much life insurance you need. There are a few key steps you should follow as you decide which is the best life insurance plan.

1. Assess your coverage needs

The first step when looking for a life insurance provider is figuring out how much coverage you need. This refers to the death benefit the insurance company will pay to your beneficiaries if something happens to you.

You can begin by considering your future financial obligations, expenses and how much you want to cover for your dependents. This may include:

• The remaining balance on your mortgage
• Student loan balances
• Lost wages from a career cut short
• Cost of living for your spouse and children
• College fund contributions
• Funeral expenses

More coverage typically means higher premiums, all other things being equal. However, there may be ways to offset the costs of adding extra coverage to your policy, such as sacrificing one benefit in exchange for another that's important to you. Your financial advisor should help you navigate these questions. They can typically help you evaluate your goals and match you with a life insurance policy that fits.

2. Choose the right type of life insurance

The two main options are term life insurance and permanent life insurance. The key difference is that term life insurance expires after a predetermined date, whereas permanent life insurance stays active for the duration of your life (as long as you continue making payments, of course).

You may also see companies offering universal and whole-life coverage as you research. These are both specific types of permanent life insurance with slight differences.

Universal life insurance provides flexible premium payments and death benefits (within certain limits).

Whole life insurance is a more stable, predictable type of permanent life insurance with the same premiums throughout the policy. This ensures your payments don't go up throughout the lifespan of your life insurance policy just to maintain the same amount of coverage.

A portion of your premium payments with permanent life insurance coverage will typically go into a cash-value account. This often grows at a fixed rate set by the insurance provider. However, some plans allow you to invest the funds in certain market indices. You can often withdraw or borrow against this cash value account in emergencies.

3. Compare quotes from multiple life insurance companies

The next step is to research the best life insurance companies and contact them for quotes on the type of life insurance you want. Make sure to reach out to multiple providers, as doing so will help you lock in the best deal.

As you go through this process, you may have to complete a life insurance medical exam as part of the quote-generating process or before your contract activates. The results of these tests can impact the cost of life insurance for you.

One thing to note here is the availability of optional life insurance riders. Most life insurance companies offer these so customers can customize their policies. If you want to add an optional rider to your plan (like coverage for chronic care expenses or a disability waiver for your premiums), make sure you request that before asking for a quote. Otherwise, the costs you compare across providers won't be accurate.

4. Evaluate the financial stability of the insurer

Another key step in choosing a life insurance provider is assessing the company's financial stability. You need to know that if something happens to you, the company will still be around to make the payments owed to your beneficiaries. The less financially stable an insurance company is now, the more you have to worry about them potentially going bankrupt and not being able to honor the terms of your contract.

There are a variety of trusted third-party organizations that assess the financial stability of insurance companies. Some of the most respected include AM Best, S&P Global and Fitch Ratings.

The criteria that go into the ranking process can be complicated. You can look up the scales each of these organizations uses to understand how financially solid your preferred life insurance provider is before committing to a policy.

5. Read the life insurance policy terms carefully

At this point, you're (hopefully) close to finalizing your decision and activating your life insurance. But make sure to read the fine print before you do.

One of the most important things to check is your policy's exclusions. Exclusions are situations where the life insurance company won't pay if you die. You should also know what happens if you miss premium payments, whether you're able to take out loans on your policy and any other key clauses that matter to you in a life insurance policy.

Finally, if you're buying a term life insurance plan, you should check to see if the policy comes with a conversion option. This lets you convert the term policy into permanent life insurance without a new medical exam. This differs from renewable term life insurance, which allows you to renew the same plan once your current term ends.

Remember, with a renewable term life insurance plan, your premium may increase as you age.

How We Chose the Best Life Insurance for Young Adults

While creating our list of the best life insurance companies for young adults, we considered each of the following factors:

• Financial stability: We looked at companies' financial stability to determine the likelihood that each will last long enough to pay future claims. We measured this by reviewing ratings by trusted third-party organizations.

• Customer satisfaction: We measured customer satisfaction by comparing life insurance companies' results in an independent study conducted by J.D. Power.

• Product offerings: We evaluated each provider's list of products and considered how they match the needs of young adults shopping for life insurance.

• Support availability: We looked at the support channels and hours of availability offered by each life insurance company to determine how easily customers can get the help they need.

These factors may not be the only ones that matter in your search for a life insurance company. It's best to conduct further research or reach out to an insurance broker if you have personalized needs that aren't covered here.

Summary of Money’s Best Life Insurance for Young Adults

• MassMutual - Best whole life insurance for young adults
• Lincoln Financial Group - Best term life insurance for young adults
• Nationwide - Best universal life insurance for young adults
• New York Life - Best permanent life insurance for young adults
• Pacific Life - Best life insurance for students