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.
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.