I have loved my twenties.
Granted, at 29, I’m not sure how much I’ll love my 30s, 40s or even 50s. But, I do know that my twenties, specifically my late twenties, have been the most impactful years of my life so far.
For starters, a lot has happened. I lived in Florida, Washington, D.C, and New York before settling down in New Orleans (at least for the foreseeable future).
I had student loan debt and a few years later paid it off. I went from having almost no emergency fund to having a substantial one and transitioning my focus to investing. Meeting a great guy turned into getting married and saving to buy a house. Kids? They’re probably a few years away for me, but many of my friends and family members are on child two.
These years sure are volatile. Sound familiar?
Your twenties are a period of time where it feels like your life goes from zero to 60. It’s not just about you anymore. It becomes increasingly about the people you love and who rely on you to be around to share a life and, yes, financial responsibilities with.
And when you have people who rely on your income to pay the bills, it’s time to ask yourself an important question: Do you need life insurance?
When you need life insurance in your 20s
Every person in their twenties knows they need insurance for their car, renter’s insurance for their apartment and belongings, and homeowner’s insurance when they buy a house. But, what about life insurance?
Now that you’ve protected tangible assets, like your home and car, it might be time to start thinking about protecting someone else – like your parents, partner or child – with life insurance. Life insurance helps make sure that your loved ones will be able to cover bills or other day-to-day expenses if you’re no longer around.
I’m not going to tell you every single person in their twenties needs life insurance. Many don’t.
But, there are several instances where someone in their twenties really does need life insurance to protect loved ones. Here’s when:
You’re in debt
It’s hard to imagine being a twenty-something without debt these days, but that’s part of the reason life insurance can make sense – even if you’re single.
The average student loan debt was more than $37,000 in 2016. Plus, many Millennials also have credit card debt, car loans, and personal loans.
While you might assume death will wipe your slate clean, that doesn’t always happen. In some cases, a surviving co-signer could be responsible for repaying your debts if you died.
If you have life insurance, you may still leave debt behind, but you’ll also leave your family with money (via a death benefit) to help them cover the bills.
The bright side is that adding life insurance to your budget doesn’t need to be expensive. A healthy 27-year-old woman can get a 20-year, $200,000 Haven Term life insurance policy for as little as $10.62 per month. If you live in a major city, I guarantee that’s less than you spend on a single lunch during your work week.
You are married
Getting married is a huge life and financial commitment. It’s simultaneously exciting and terrifying if you’re a planner like me.
Once you’re married, it’s important to consider how your death would impact your spouse. Would he or she be able to cover your portion of the daily expenses? Did you get a loan together to pay for your wedding that needs to be paid off? Could they cover both car payments?
Not getting to share the life you planned together is unimaginable. But, it’s important to ensure you’re both prepared for the unexpected. A life insurance policy can help your spouse pay the mortgage or other debts, cover bills and final expenses. Overall, it may keep them from needing to uproot a life they can no longer afford on their own.
If you’re not sure how much coverage you need, don’t worry. That’s the simple part. An online life insurance calculator can take into consideration both of your incomes and joint debts to recommend the right amount for you.
Life insurance needs aren't one-size-fits-all.Calculate your needs
You have a child
While many people are waiting longer to have children, it’s not uncommon to have a child (or a couple!) in your 20s. And once you become a parent, you really should think about buying life insurance. As a mom or dad, you have so many new responsibilities to think about… and pay for.
Nobody wants to imagine themselves dying young, much less dying before they can watch their child grow up. Unfortunately, accidents and surprise illnesses happen. We may not be able to predict them, but we can still plan for the worst case scenario. You’ll want to make sure that both you and your spouse are protected so that you can financially care for the children if one of you were no longer around.
Life insurance can be put toward a number of different expenses assuming you purchase enough coverage. It can help pay for daycare until kids get older, extracurriculars and educational expenses in middle school and high school. If you also plan to cover college for your children, a policy could help pay for that as well.
When you can’t be there to care for your kids financially, life insurance can.
You’re young and healthy…for now
Even if you’re single and living debt free, consider that life insurance is a lot cheaper when you’re young and healthy. So if you know financial dependents are in your near future, the best time to get coverage could still be now.
As a twenty-something, rates for term coverage can be very affordable. A healthy 25-year-old man can get a twenty-year, $100,000 term policy for as little as $9 per month.
If you become sick or pick up a chronic illness, it becomes a lot harder to find a life insurance company who will provide an affordable policy. But if you buy life insurance now, you can lock in those low rates for ten, twenty, or even thirty years.
How much life insurance does a twenty-something need?
When shopping for a policy, many experts recommend five to 10 times your annual income in life insurance coverage. So, if you make $55,000 per year, that would be a range of $250,000 – $600,000 in coverage. Perhaps more if you have children and a small emergency fund.
That said, life insurance needs are specific to your financial situation. An easy way to understand how much coverage you may need is by using a free online life insurance calculator. It’ll take into consideration numerous factors to provide you with a few possible coverage options. It’ll also tell you if you don’t need a policy at all.
There are many financial and lifestyle unknowns in your twenties. Your income could surge, you could get married or divorced, and you could have one or several kids. You should periodically revisit your life insurance needs as your financial situation changes.
What are you leaving behind?
If your twenties are transitioning into a time where you have people who rely on you financially, then it’s probably time to consider life insurance.
For less than you spend on TV streaming services, you can help ensure that your partner and kids can meet their day-to-day financial needs. Life’s expensive, as you know.
We have an entire lifetime ahead of us (hopefully). However, a little preparation goes a long way toward providing peace of mind for yourself and a lasting legacy to the people you love.