A large amount of life insurers won’t accept applicants until they reach the age of 18, but even once reaching this age, a lot of younger adults aren’t thinking about life insurance.
Probably due to the belief that death is far into the future, many young adults believe they do not require life insurance, especially if they do not have children or own property.
But even if this is the situation, debt is becoming more commonplace in today’s society and therefore, even those at a younger age are finding themselves borrowing money.
In October 2017, over 4.2 million of the UK population were in serious debt.
Unfortunately, if any of these debt holders were to die, the responsibility of the outstanding balance would be passed over to those closet to them.
Sadly, even at a young age, time of death cannot be guaranteed, and it is always possible for the unexpected to take place.
Life insurance can provide a payout to your loved ones to help settle the remaining balance of any debts in your name and avoid causing financial burden should the worst happen to you.
Along with providing this level of cover, there are actually a number of other reasons why taking out a life insurance policy can be more beneficial at a young age, as opposed to in later life;
Lower monthly premiums
Life insurance monthly premiums are calculated by the insurer based on the likelihood they will have to make a payout.
Therefore, the higher the risk you pose to an insurer, the more you will be charged on a monthly basis.
Generally speaking, the younger you are, the more likely you are to out live the term of your policy – resulting in the insurer not having to make a payout.
This reduced level of risk will result in lower monthly premiums than if you were to take out the same level of cover several years down the line.
Less Likely to Have Suffered Medical Issues
As discussed above, the main reason for being charged less at a younger age is due to the lower risk you pose to the insurer.
Not only is this because you have more years ahead of you, but that you are also less likely to have suffered from a medical condition.
For example, type 2 diabetes tends to take hold as a result of years of living a poor lifestyle and unfortunately, as a population, the UK is partaking in more unhealthy activities.
Contracting such disease as diabetes during your life insurance policy does not affect its validity, but to take out life insurance after being diagnosed with such an illness will significantly increase your monthly premiums.
5 million people in the UK are at high risk of diabetes (and this doesn’t take into account those already diagnosed), whether you consider yourself to be at risk or not, it is best to take out life insurance at a young age before any medical conditions have taken place.
Equally, other diseases such as cancer, heart attacks and strokes are far more prominent amongst the older population.
Meaning again, that if you wait until latter life to take out life insurance, you are more likely to have suffered one of these.
Joint Life Insurance
If waiting until later life to take out life insurance, it may become the case that in a partnership you are unable to afford the life insurance premiums of two single policies.
This leaves two options; only securing one single policy and leaving one partner uninsured, or taking out a joint policy.
If anything were to happen to the uninsured party, the remaining party would be left with the financial burdens of the deceased.
A joint policy would alleviate this as it would pay out regardless of which party died.
However, in later life there is the possible presence of dependants.
If both partners were to die together, any dependents would only receive one payout amount which may not be large enough to cover the loss of parents.
Taking out two single policies at a younger age, could result in a total monthly outgoing lower than that of a joint policy at an older age.
When it’s not good to take out life insurance
Generally speaking, there is little reason not to arrange life insurance in young adulthood for the various reasons mentioned above.
However, with regards to type of life insurance you opt for at this young age, there is one exception.
Whole of life insurance lasts for the rest of your life and whilst it does guarantee a payout will be made, it does involve premium payments to be made until you die.
This type of policy is unlikely to be cost effective at a young age because, given that you live a long life, you could end up paying more into the policy than your loved ones would receive upon your death.
Summary
As you can see there are many benefits to taking out life insurance even in young adulthood;
- Life insurance isn’t only necessary to cover a mortgage or children, it can be used to cover debt also
- Those of a younger age benefit from lower monthly premiums due to posing less of risk to the insurer
- Younger adults are less likely to have suffered from a medical condition such as diabetes or cancer
- The cost of two single premiums in young adulthood could be as cheap as one joint policy in later life
- Whole of life insurance is unlikely to be cost effective for those in early adulthood
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