Building a financial plan can feel tricky, especially when you’re in your 20s or 30s and just starting out. It’s a time where you may be balancing many priorities, like paying debts and planning for the future. And, the pandemic may have put a pause on your career opportunities and development.
It can be tempting to put off financial issues until later. But thinking about life insurance now can help you balance — and achieve – your early goals.
“Life insurance is one of the cornerstones of any properly laid out financial plan,” explains Mark Coutts, Sun Life advisor and President and Senior Advisor at Coutts Financial Services Inc. “It can provide that safety net. So while you’re focused on all your goals in life, you’ve got a plan in case you need it.”
Why should you get life insurance in your 20s or 30s?
1. Life insurance offers financial protection for you and your loved ones.
It can help provide the security you need to reach your financial goals. It’s particularly useful if, in the future, you’re looking to:
- buy a home,
- get married or
- grow your family.
“Not only are these important personal milestones, they’re important financial milestones,” says Coutts. You have more responsibility on your shoulders. For example, you may have debts that you owe on a mortgage. Or, you may have a family to help support.
Life insurance helps you meet those responsibilities. How? It can leave your family or beneficiaries with a tax-free death benefit.
What’s a death benefit? It’s a set amount of money that’s given to beneficiaries (your loved ones) when you (the insured person) die. The death benefit may help cover a mortgage and living expenses and can help your family remain financially secure.
More benefits to getting life insurance at a young age
Major financial milestones, like buying a house, can be the perfect time to review your coverage. But there are other benefits to seeking out life insurance early — no matter what your short-term financial goals.
2. It’s cheaper. The younger and healthier you are, the more likely you’ll have lower monthly premiums. (Premiums are your monthly or annual fees.)
3. It’s easier to get approved for it. Insurance companies are more likely to approve your life insurance application if you’re healthy. So applying for life insurance while you’re very young and in good health makes it much easier to get coverage. Plus, waiting until later in life may limit your options.
What type of life insurance do you need in your 20s and 30s?
Where can you start when you’re young and healthy? Term life insurance. It provides coverage over a set number of years. This could mean coverage for 10, 20 or 30 years.
Here’s what term life insurance includes:
- Flexibility to add more coverage to your plan later. “We sometimes call this clause a guaranteed insurability benefit. It allows you to boost your coverage when you need to,” says Coutts. For example, in the future, you may have more than one child to take care of. In which case, you may need more coverage to help protect your growing family financially.
- The option to change to a permanent plan. Permanent life insurance gives you guaranteed protection for life. Converting your term plan to a permanent one means you won’t have to provide any additional medical information.
It’s tempting to apply for a round number, say, a million dollars. But that could be more coverage than you need. You don’t want to be over-insured, and you don’t want to be overpaying for life insurance, says Coutts.
How to find out what's right for you?
Finding the right coverage for your financial situation is just as important as getting coverage. An advisor can help. In the end, they’ll help you feel secure in your financial future.
A Sun Life Financial advisor can:
- talk you through what you need now and
- explore what you may need in the future.
- help you juggle competing priorities.
Most advisors now offer to meet Clients virtually by video chat. Find an advisor.
Read and watch more:
- Term life vs. permanent life insurance: What’s the difference?
- How to choose the right type of life insurance (video)
- When should you buy life insurance? (video)
This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.