Twenties Smarties: Life Insurance is Cool

Just like how twenty something do not think about retirement and 401K plan, they also do not think about life insurance.  Why should any twenties young adults even think about life insurance?  I certainty did not know much about life insurance nor did I consider getting one when I was in my early twenties.  There really isn’t any reason for twenties to get life insurance.  However, I believe this is exactly the reason why the financial savvy twenties young adults or the “Twenties Smarties” should think about and consider getting life insurance when they are young in age.   I’m not talking about the term-life insurance.  In my opinion, twenties young adults should not even think about the term-life, as many readers initially thought reading “Life Insurance is Cool”.  However, I feel differently with the whole-life insurance.

USM Related Post: Get Life Insurance Policy Now

I happened to buy a whole life insurance in the amount of $145,000 when I was 27 years old mainly because I was already married and just had my first child.  At the time, I did not know much about life insurance but I thought I at least needed some protection at minimum to cover our mortgage payoff balance.  My premium was and still is $97.50 per month which I have been paying for now nine years.  In early stages after I bought this whole-life insurance, I had doubts and wasn’t sure if I had made the right decision.   However, I now know I did make the right decision on purchasing this whole-life insurance.  If I had gotten 20 year term life at age 27, it would expired at age 47, which will leave me hanging with no life insurance after age 47.  Because I bought whole life insurance, it never expires and I have about $9500 in accumulated cash value on top of my face value of life insurance, which also increased slightly.

Now that I have a family with two kids, I fully realize the importance of life insurance.  It has turned into a necessity and is not an option anymore.  Last year, I increased my life insurance coverage just to make sure my family will not suffer in case I were to die early and because $145,000 isn’t nearly enough.  I bought another $150,000 worth of whole-life at age 35.  To my surprise the premium on $150,000 at age 35 jumped to $150 per month, more than 50% increase compared to age 27.  This fact helped me to realize the importance of starting whole-life insurance early when you are in your twenties.  I also added a 20 year $500,000 term-life insurance at just below $21 per month, which would expire at age 55.  So, I am hoping $800,000 worth of life insurance plus what my company offers for free are enough to cover my family until I reach age 55 in case something bad happens to me.

For young adults in twenties, my hope is that you would seriously consider getting whole-life insurance, if your budget allows it.  This insurance obviously is not for something that provides any benefit immediately.  However, it will help you to be prepared for a smoother life in your thirties and beyond.  Once you get married and start a family, you will start thinking about life insurance especially if your spouse ends up staying home taking care of your kids and the family.  Remember, the sooner you start whole-life insurance the lower your premium will be throughout your entire life.  I understand it is difficult to start thinking about life insurance so I urge you to start talking to your friends and families about it.  Remember, getting the whole life insurance, not the term-life, is important when you are still in your twenties.  Waiting to get into whole-life insurance can cost you as much as 50% more if you wait until mid-thirties.  Term-life premium is still very affordable for anyone to add to their life insurance portfolio for people in thirties, but the whole-life insurance premium significantly increases and may become unaffordable for waiting too long.

  • Miss T @ Prairie EcoThrifter December 19, 2011 at 1:10 pm

    We bought life insurance plans when we got married but they are term plans. We will increase our coverage when kids come along but the hope is to end up getting rid of it in the future once we have enough assets built up.

  • The Jenny Pincher December 19, 2011 at 5:49 pm

    Great reminder. My parents bought my brother and I plans when we were young & I also carry some life insurance through work.

    • UltimateSmartMoney December 24, 2011 at 6:30 pm

      I have not considered purchasing whole life insurance for my kids. I think this is a great idea! I will look into this immediately to see what kind of premium it will be…

  • cashflowmantra December 19, 2011 at 7:26 pm

    I have gone with the term plans which I hope to someday not need. I also have disability insurance which statistically is more likely to occur anyway. The most important fact is that my family is protected if something should happen.

  • John@MoneyPrinciple December 20, 2011 at 3:59 pm

    Quite right although at the other end of the age spectrum of course term life insurance is probably a better option but if you have built enough assets and/or have some protection through work, it may not be necessary. On the other hand you have to look at what happens if you drop off the cliff and a spouse/partner is left holding the baby – literally or not.

    On this morbid topic, another thing to think of is making a will. We did that some time ago before DS3 was born.

    Oh dear – what a thought just before the festive season as well!

  • UltimateSmartMoney December 24, 2011 at 6:32 pm

    Yes, I also think term life insurance makes total sense for people in 30’s and 40’s. But for 20’s, I believe Whole life insurance is a better option.

  • John @ MarriedWithDebt January 3, 2012 at 7:30 pm

    I just recently got term insurance, and I’m 30. I was irresponsible going so long without it, but feel better now that I do.

    I had always heard that term was the way to go over whole, because if you die most policies just keep the accumulated cash rather than give to your heirs.

    Plus, one could go with a term policy for 20 years, and by putting aside $50 per month into a lockbox, you’d have $12,000 waiting for you at the end of the term.

    Insurance is tricky. Thanks for spelling it out for young folks.

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