As you age, life insurance is something that you will need. It can prove to be very valuable for young adults planning on starting a family or growing their family. Because life insurance premiums rise with age, it is a good idea to buy a policy when you are young and healthy in order to lock in a low rate.
Most Frequently Asked Questions
What’s the difference between Whole Life and Term Insurance?
There are two major types of life insurance: term insurance and permanent life insurance. While whole life insurance is the most common type of permanent insurance, it is not the only one. Universal life insurance is another type of permanent coverage. It is more flexible than whole life insurance.
The coverage length is one of the main differences between permanent and term life insurance. Term life insurance covers you for a set number of years while permanent life insurance covers you for the rest of your life, provided that premiums are paid.
Permanent policies tend to be more costly than term life policies when you are young. However, term life rates rise with age and don’t have a cash value as permanent policies.
What is the cost of life insurance?
Life insurance costs depend on many factors such as your age, health, insurance company, and policy type. Permanent life insurance tends to be more expensive than term insurance. Term premiums for life insurance are cheaper if you’re young, healthy, and fit.
We can compare the rates of term life insurance offered by some of the top life insurance companies for young people to better understand their prices. A Protective 30-year term policy for $250,000 might cost a healthy 25-year-old $16 per month. According to our research, Haven might offer a similar policy for $18 per month.
As a young adult, you need to consider more than just the cost of life insurance. As you compare quotes and look at different companies, it’s important that you consider other features such as accelerated deaths benefit riders and whether term policies can be converted.
What amount of life insurance do I need?
There are many ways you can determine how much life insurance you need. You could buy coverage equal to your annual salary multiplied by a set number of years. If you earn $100,000 per year, and you want to provide financial security for your family for the next 10 years, you might consider a policy that has a $1,000,000 death benefit.
You can also choose to have coverage based on the amount your family would need to maintain the same standard of living standards without your income. Add up the costs of your mortgage payment, healthcare insurance premium, childcare costs, and food costs. If you are going to die, consider the cost of your funeral and final medical bills.
An insurance agent can assist you in analyzing your income replacement requirements and providing guidance on choosing life insurance. This is a common feature offered by many life insurance companies.
How we chose the best life insurance companies for young adults
We used a thorough methodology to compare and review providers in order to find the best life insurers for young adults. To find out what young adults need from life insurance providers, we reviewed third-party studies before we began evaluating companies. Studies include J.D. Power’s 2021 U.S. Individual Life Insurance Study, and the 2021 Insurance Barometer Study from Life Happens and LIMRA.
Next, we collected data about 91 life insurers. These companies were evaluated using over 50 data points from the following categories.
- Financial strength
- Cost
- Policies and their features
- Policy riders
- Customer satisfaction
- Customer complaints
- Online tools
- There are no-exam options
The best-ranked companies had reasonably-priced term insurance and digital features such as online quotes, online applications, and same-day issues. Companies that offer educational resources and live chat did well.
After determining which companies scored best based on these and similar criteria we chose companies with an AMBest Financial Strength Rating of either A+ (Superior) or A++ (Superior). According to the National Association of Insurance Commissioners complaint data, we excluded companies that received more consumer complaints than the average over three years.