More Young Adults Are Buying Life Insurance. Here’s Why
Life insurance isn't exactly a compelling topic; it's not something you likely discuss at parties. Besides, no one really wants to think about their own mortality.
Those factors have made life insurance complex, intimidating and too easy to overlook.
However, that mindset is changing. According to the 2024 Life Insurance Barometer Study, 50% of millennials and 36% of Gen Z participants said they had life insurance. That's up from 46% and 34%, respectively, in just 2022. That highlights a growing trend of young adults purchasing life insurance sooner.
Here's why life insurance is increasingly popular for young adults (and why you should consider getting a policy, too).
Why Young Professionals Are Considering Life Insurance Earlier
The traditional reasons to buy life insurance early continue to drive the trend to the purchase of policies at younger ages. Changes to the life insurance industry over the past few years are also factors.
Here are three major reasons why life insurance is appealing to young professionals right now:
Buying Younger Has Benefits
When you're young, such as during your 20s and 30s, you're likely relatively healthy. You're less likely to have serious or chronic medical conditions, or a history of medical issues, that could complicate getting coverage. As a result, it's easier to get a policy and to qualify for the best rates.
Purchasing a policy before major health issues arise allows you to lock in a policy at a lower premium; for instance, at 30, you could buy $500,000 in coverage with a 30-year term for just $38 per month, a rate that would surely rise if you bought the same coverage when you’re older. Policies with a shorter term typically cost even less — on average, a $500,000 policy with a 20-year term will cost just $26 per month.
By locking in coverage earlier, a diagnosis of a heart condition at 35, say, would be a non-event as far as your policy goes. The coverage would stay in place — at the same low rate — for the duration of the policy's term.
It’s not that you couldn’t sign up for coverage when you’re older; it just tends to become more difficult. Some conditions will exclude you from coverage with some insurers entirely. And, if you do find a policy, you'll find that premiums will be significantly higher due to your age and health.
More Opt for Term Policies
Whole life insurance, a form of permanent coverage, which has an investment value, has long been the most popular form of life insurance. According to LIMRA, an insurance industry association, whole life policies make up about 38% of the life insurance market. However, whole life insurance tends to be expensive; PolicyGenius reported that the average monthly premium for a $500,000 whole life policy was $440.
However, young adults are increasingly applying for term life insurance instead. Term life insurance is growing in popularity, with the total premiums paid for term coverage expected to reach $3 billion by the end of 2024, a new record for the product.
For young adults, the appeal to term life insurance is its low cost, as noted above.
It's Easier to Buy Life Insurance
Buying life insurance used to be a larger time commitment than it often is today, which might have discouraged time-strapped younger people from getting it.
Traditionally, to buy life insurance, you met with an agent, discussed your finances and policy needs while sitting across a big desk, and chose a policy. You signed the paperwork and shook hands. Then, you had to get a medical exam, complete with extensive bloodwork. That process was anything but enjoyable and could take weeks to complete.
However, the insurance industry as a whole has drastically changed. Now, many companies allow you to apply for coverage online, without needing to meet with an agent. And, many insurers offer simplified or accelerated issue coverage, allowing you to purchase policies without a medical exam or the need for blood analysis and the like.
As a result, a number of companies, including some of the best life insurance providers, now allow you to purchase life insurance in a matter of minutes. If you're approved, you can sign the policy documents online, and your policy will go into effect as soon as the next day. It's a faster, simpler way to buy coverage, eliminating a lot of the obstacles and hassles that previously existed.
How to Buy Life Insurance
Whether you're a parent with young children or single and want to lock in coverage now in case you develop health issues later, here are some tips to help you as you shop for a policy:
Consider your income
As a general rule of thumb, it's a good idea to purchase a policy with a death benefit equal to 10 times your salary.
Think about your debt: Young adults are facing sky-high housing prices, record levels of education debt and car loans. If you have debt, purchasing a life insurance policy that can pay off what you owe can be a huge help to your loved ones.
Compare rates
Rates, available insurance riders or endorsements and eligibility criteria vary by insurer, so request quotes from several insurers. Some companies allow you to get quotes online, while others will require you to contact an agent.
Think you can’t afford life insurance? Think again.
