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As a young adult in your 20s, you’re likely concentrating on your career, paying off loans and trying to build up your savings. But if you’re interested in protecting your family and finances, you could lock in rates starting around $13 to $15 a month by purchasing a life insurance policy while you’re young and healthy.
The best life insurance policy for young adults comes down to your needs. Term life insurance is the best choice for most young adults, though a permanent life policy may suit the needs of someone who wants lifelong coverage while building savings.
Term life insurance is the simplest and cheapest type of coverage, making it the best choice for most young adults shopping for a policy. While it’s cheap, life insurance is still an expense, so you want to ensure you buy a policy you can afford. With term life insurance, the premiums are predictable, so you know exactly how much you’ll pay each month or year. And if you die during your policy’s term, it kicks in to take care of your loved ones and cover any debt, like student loans.
If you want lifelong coverage and you’re already planning to supplement your retirement savings, you could opt for a permanent policy — like whole life which builds cash value over time and pays out a death benefit when you die. Permanent policies tend to cost more since they have a cash value component.
But, if you buy permanent life insurance at an early age, your premiums could grow into a sizeable cash asset as the years go by. Once you’ve built up enough cash value — which usually takes 10 to 15 years — you can start taking out loans against your policy. However, life insurance isn’t as effective for investing as other tools like a 401k or IRA.
The average cost of life insurance for young adults between 20 and 30 years old for a $500,000, 20-year term policy is $22.34 for a man and $18.62 for a woman. At this age, it’s easy to qualify for low preferred rates since age and health are two of the biggest factors that affect your rate.
| Age | M/W | $250,000 policy | $500,000 policy | $1,000,000 policy |
|---|---|---|---|---|
| 20 | Man | $14.93 | $22.83 | $36.12 |
| 20 | Woman | $12.69 | $18.42 | $28.06 |
| 21 | Man | $14.84 | $22.70 | $36.00 |
| 21 | Woman | $12.69 | $18.42 | $28.06 |
| 22 | Man | $14.75 | $22.51 | $35.88 |
| 22 | Woman | $12.69 | $18.42 | $28.00 |
| 23 | Man | $14.66 | $22.35 | $35.63 |
| 23 | Woman | $12.67 | $18.39 | $27.79 |
| 24 | Man | $14.55 | $22.12 | $35.31 |
| 24 | Woman | $12.67 | $18.39 | $27.73 |
| 25 | Man | $14.46 | $21.96 | $34.99 |
| 25 | Woman | $12.73 | $18.49 | $27.73 |
| 26 | Man | $14.48 | $22.01 | $35.16 |
| 26 | Woman | $12.79 | $18.59 | $28.07 |
| 27 | Man | $14.54 | $22.13 | $35.26 |
| 27 | Woman | $12.83 | $18.73 | $28.34 |
| 28 | Man | $14.67 | $22.22 | $35.75 |
| 28 | Woman | $12.94 | $18.83 | $28.66 |
| 29 | Man | $14.75 | $22.37 | $35.98 |
| 29 | Woman | $13.00 | $18.99 | $29.06 |
| 30 | Man | $14.89 | $22.54 | $36.29 |
| 30 | Woman | $13.06 | $19.11 | $29.32 |
Rates are provided by Quotacy based on 20-year term policy for healthy applicants, and valid as of April 2021 in all states except Montana.
To find the cheapest insurer for young adults, we compared the rates for a $250,000, 20-year term life policy for a healthy 20-, 25- and 30-year-old man between 12 major insurers. According to our research, Banner Life and Protective offer the lowest rates across each of these age groups at rates between $12.30 to $12.61 monthly.
| Company | 20-year-old rates | 25-year-old rates | 30-year-old rates |
|---|---|---|---|
| AIG Life Ins (American General) | $12.61 | $12.61 | $12.82 |
| Banner Life (Legal & General America) | $12.30 | $12.30 | $12.61 |
| Cincinnati Life | $15.18 | $14.52 | $13.64 |
| Equitable | $20.75 | $19.25 | $20.55 |
| John Hancock | $16.06 | $16.06 | $17.46 |
| Pacific Life | $12.83 | $12.83 | $13.00 |
| Principal | $12.99 | $12.99 | $13.16 |
| Protective | $12.30 | $12.30 | $12.61 |
| Prudential | $24.06 | $20.56 | $22.09 |
| SBLI | $12.80 | $12.80 | $12.94 |
| Transamerica | $12.69 | $12.69 | $12.90 |
| United of Omaha | $14.62 | $14.62 | $14.84 |
How much life insurance you need comes down to your financial obligations and how much you’re willing to pay in premiums.
It’s a good idea to review your policy as your situation changes. If you’ve gotten married, bought a house, or acquired assets or debt, you could consider buying a higher level of coverage.
In your 20s, the difference between double the coverage is often less than a $10 monthly difference. For example, for a healthy 20-year-old woman, doubling your coverage from a $250,000 policy to a $500,000 policy costs $5.73 more each month.
If you have financial obligations or loved ones who rely on your income, life insurance can help protect you and the people you care about. Though there are other common reasons someone in their 20s may opt for a policy at this age:
While your priorities as a young adult might be establishing your career, paying rent, and traveling, it’s worth looking at life insurance. When you’re young, and healthy, you can qualify for low preferred rates — and for most types of policies, those rates are locked in.
Though it can be cheap, life insurance is still an expense. If you decide to explore life insurance as a young adult, shop around for the best policy with our comprehensive guide to life insurance.
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