If you are a young adult in your 20s, now is a good time to plan your financial future. In general, this entails creating a solid financial plan that will help you build an emergency fund and save for retirement. More importantly, it will help you pay off your debts, allowing you to create a nest egg that will benefit you and your loved ones over the long term.
To ensure your nest egg serves its purpose even after your pass away, you should take the necessary measures to protect it, and the way to achieve this goal is to purchase life insurance while you are still young.
A recent survey from Princeton University found that 65% of young adults (ages 18 to 29) in the U.S. today do not carry life insurance coverage because they deem it unnecessary, especially if they are young and healthy. However, even if you’re a physically fit young adult, there are several reasons why you should consider purchasing life insurance for young adults. Here are 4 reasons why you should buy life insurance as a young adult:
Provides for Dependents –
The life insurance you purchase as a young adult can fill various financial needs after you pass away, especially if you have dependents. For example, if you leave behind dependents, such as a spouse or children, who depend on your paycheck to meet their financial needs, life insurance can replace that lost income for them.
Protects at Lower Premiums –
Typically, life insurance carriers base their life insurance coverage premiums on the age of a policyholder. More precisely, you’re likely to get lower rates and premiums if you purchase a life insurance policy while still in your 20s compared to when you are in your 30s or older. Hence, even if you’re still single and childless in your 20s, you should acquire life insurance for young adults to enjoy the affordability benefits associated with it.
Pays Off Debts –
Your life insurance policy can pay off your estate’s debt, protecting your estate from your creditors. The most common type of debt among young adults in the U.S. is federal student loan debt.
According to figures from the Federal Reserve, about one-sixth of adult Americans owe $1.5 trillion about $120 billion in student loans from the federal government and private lenders, respectively, with the average borrower owing about just over $22,000.
While on the one hand, the government typically discharges federal student loans, including Parent PLUS loans, for dead borrowers, in the meanwhile, on the other hand, private lenders usually transfer the debt burden to a borrower’s cosigners. In such a case, your policy would pay off your private student loan debt, ensuring your cosigners do not inherit your student loan debt.
Pays Off Funeral and Burial Expenses –
Most life insurance policies also cover the funeral, burial, or other related costs, potentially adding up to thousands of dollars. More specifically, figures from the National Funeral Directors Association show that the median cost of a funeral in the U.S. is about $8,755, whereas the median cost of cremation is $6,250. Fortunately, if you have life insurance for young adults, your loved ones would not necessarily have to bear this financial burden after your passing.
If you are a young adult working hard to build your nest egg, you should buy life insurance for young people to protect your nest egg, even after you pass away.
Do you need help securing the right life insurance to fit your needs? If so, then contact the experts at John E. Peakes Insurance Agencyfor the assistance you need today. Our dedicated team is happy to address all your coverage needs in Lancaster, California.