August 14, 2022
  • August 14, 2022

Life Insurance for Young Adults – Forbes Advisor UK

By on November 17, 2021 0


When you’re young, the last thing you probably think about is purchasing life insurance.

Chances are, you are focusing on the daily costs and enjoying life. You may also believe that life insurance is something that is only worth considering when you are much older.

But buying life insurance under the age of 30 could save you a bundle and, most importantly, provide financial security for your loved ones if you’re no longer around.

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At what age should you take out life insurance?

Buying life insurance doesn’t depend on your age – that’s pretty much where you are in life (you can buy it once you’re 18). Regardless of your age, there are key life events that can prompt you to purchase life insurance. It could be buying a property, getting married or having a baby.

Sadly, terrible things are happening regardless of your age, as the impact of Covid-19 has evidenced – and life insurance is here to provide financial support for everyone who depends on you. In other words, if you have dependents, you should have life insurance.

You will pay a monthly or annual premium and, if you die during what is called the ‘term’ of the policy (you select that term – say 25 years), a lump sum *, chosen by you, will be paid to your loved ones. .

This can be used to write off a mortgage, for example, pay for child care and provide a cash reserve to cover all other debts and daily costs.

* There is a type of policy that pays monthly income from the time of your death until the end of the policy term – this is often referred to as the Family Income Allowance.

Why buy life insurance when you’re young?

First, if you need life insurance because you have dependents, then you need life insurance because you have dependents, no matter how young you are.

But the added benefit of buying your policy when you’re young means your premiums will be lower than if you waited a few years. Life insurance companies take your age and health into account when setting your premium and, other factors aside, younger people pay less than older people.

What is the impact of age on life insurance?

If you buy life insurance before the age of 30, you will pay a lot less. There is healthy competition among the providers, so you can look for cheap premiums.

For example, you will pay around £ 5 per month for life insurance worth £ 150,000 at 20 years. Wait until you’re 35-45, and that climbs to around £ 18. At 40, the cost is around £ 20 and reaches over £ 30 in your 50s. So while you will pay longer if you buy a policy when you are young, you will pay less over the years in total and be insured for longer.

Say, for example, a 20 year old man pays £ 5 per month for a policy until he is 68. It will cost him £ 2,880 for 48-year coverage. If he waits until 30 and pays £ 12 a month, with a policy in force until age 68, the cost jumps to £ 5,472.

Of course, the amount you pay depends on a variety of factors, but for most people, buying a policy when you’re young will still save you money.

What Else Affects the Cost of Life Insurance?

Besides your age, your general health and your job will also affect how much you pay. If you are a smoker, you will pay more for your coverage. The likelihood of you having an accident at work can play a big role in the cost. An office job is considered much less risky than, say, manual work on a construction site.

The level of coverage and the type of policy you want will also have an impact on your premiums. The larger the potential payout, the more you will pay. You will also pay more for certain types of life insurance, such as coverage that spans your entire life, rather than for a specific period.

But bonuses tend to pay off when you’re young and can be tailored to fit your budget.

How to find the best life insurance for young adults?

The different types of life insurance policies can seem confusing, and which one is right for you will depend on your personal circumstances.

Generally, term insurance tends to be the most popular type for young people. You choose the term so that you can organize the policy until, say, your mortgage is paid off, or your children are likely to be financially independent.

You can purchase “level” term insurance, the amount of coverage of which remains the same for the duration of the policy. Or, you can get “declining” term insurance, which is cheaper. With this policy, the amount of coverage decreases over the life of the policy – it is often taken out in conjunction with a mortgage, where the amount you owe decreases over time.

As mentioned earlier, the family income allowance does not pay a lump sum. Rather, it pays a regular amount (again, chosen by you) to your dependents each month.

You can buy life insurance that lasts your entire life, no matter how long you live – this is called “lifetime” coverage. It’s usually more expensive than term coverage and it’s not designed to do the same job – it’s typically purchased for estate planning and investment purposes, rather than to protect your dependents from your unexpected death. and premature.

What other things should you think about when buying life insurance?

  • Make sure that the level of coverage you have will cover all the essentials, such as clearing your mortgage, as well as other debts, if you wish, and ongoing living expenses for as long as your family lasts. ‘required. Typically, experts say around 10 times your salary is a good place to start, but do your own math.
  • If you don’t earn anything – maybe you take care of the house and the kids – you should still have life insurance. The proceeds of the policy could then be used to pay for those chores to be done if you are not there, allowing your partner to continue earning money.
  • Check what existing coverage you have. If you are an employee, you may find that you have what is known as “Death in Service” coverage as a work benefit. This typically provides four times your pay as life insurance, reducing the amount of coverage you need to purchase for your own policy.
  • Do you need joint life insurance that covers both you and your partner? It may be cheaper than buying two policies, but be aware of the risks. If you died, your partner would receive a lump sum, but then they would no longer be insured. And, if you both die at the same time, there will only be one payment for those who remain.
  • Do you need critical illness insurance in addition to life insurance? These are often sold together, but this will increase the cost. Critical illnesses are chargeable if you are diagnosed with one of the critical illnesses listed in the policy.
  • Do you have any specific pre-existing health problems and are you a smoker? Be honest with the insurer, or you risk voiding your policy.

What if you’re over 30 and haven’t purchased life insurance?

It’s never too late to financially protect your family. Life insurance gets more expensive as you get older, but you can still get coverage if you need it. You can even get coverage if you’re retired, but most people buy policies while they’re still earning.

Compare life insurance quotes

Adapt the coverage to your needs and gain financial security for your loved ones