Secure Your Future: Why Young Adults Need Life Insurance

Life insurance? It’s likely one of those things that hasn’t even crossed your mind yet – like retirement planning or switching to decaf. Maybe you’ve seen offers in the mail or online and thought, I’ll deal with that later. After all, you’re young, healthy, and have plenty of other financial priorities. But here’s the thing: getting life insurance early is one of the smartest financial moves you can make. It’s more affordable now than it will ever be, and it ensures that your loved ones are protected, no matter what.

Life insurance isn’t just for families or older adults - it’s a smart move for anyone looking to secure their financial future. Whether it’s protecting a co-signer on a loan or locking in low rates while you’re young, the right coverage can give you peace of mind. Let’s break down why it matters and how to find the best fit for you.

Why Life Insurance is Important

Life insurance protects your loved ones in the event of the unthinkable. It provides a financial safety net for your beneficiaries, such as your children, spouse, dependent parents, and other loved ones. 

Even if you don’t have substantial assets yet, life insurance can still be a beneficial addition to your fiscal picture. If you have financial obligations that someone else co-signed, say your parents on your student loans, they will be on the hook for those payments even if you pass away. 

Here are some of the most common reasons for obtaining life insurance: 

• Replace income in the event of sudden death. 

• Cover end-of-life costs – funerals are expensive! 

• Provide an inheritance for your beneficiaries and leave your loved ones a financial legacy.

•  Give back to important causes by designating your favorite charity as a beneficiary.

• Protect your small business by covering payroll and other expenses should your death disrupt operations. 

• Diversify your investments and enhance your retirement plan.

• Cover estate taxes for your heirs. 

Keep in mind that premiums tend to rise as you age. If you’re young and healthy, your premiums will likely be at their lowest levels now – allowing you to lock in affordable rates for years to come. 

Who Needs Life Insurance?

Buying life insurance is a very personal choice. Not everyone wants or needs to be covered, but there are many cases where having a policy in place can be especially beneficial. 

Parents: Parents with dependent children have multiple costs to be concerned with, including childcare, school, extracurricular activities, higher education, housing, and necessities. The death of a parent can leave children at a severe economic disadvantage when facing how to pay for these and other future costs. Life insurance ensures that your children will be covered should anything happen to you. 

Couples: Suppose you share financial obligations with your partner, such as a mortgage or other joint economic ventures. In that case, the passing of one partner can severely impact the financial standing of the surviving other individual. They may be unable to keep up with the same monetary responsibilities after such a significant loss of income. Having life insurance helps the surviving partner maintain their lifestyle. 

A life insurance payout can also provide a buffer for grieving loved ones. If they need to take an extended break from work to grieve their loss, an insurance payout can give them the breathing room to take a break without worrying about income. 

Homeowners: A home is typically your most valuable financial asset. Your mortgage payment likely makes up a considerable portion of the household budget and can become an incredible burden if an income-earning housemate passes away. Life insurance can ensure that your spouse, partner, dependents, or other beneficiaries can keep the home if you are gone. 

Primary Earners: If you’re the breadwinner of the family, your loved ones depend on you to survive financially. If something happens to you, they may be unable to support themselves without your contributions to the household. It can take a long time for your surviving family members to find a job or transition to a higher paying one, especially in the current job market. Life insurance ensures that the bills are covered while your beneficiaries take time to adjust. 

Types of Life Insurance 

Life insurance isn’t one-size-fits-all. There are several options to fit different financial goals and life stages. Here’s a breakdown of the main types to help you decide which is right for you.

Term Life Insurance

Best for those who need affordable coverage for a set period. It’s straightforward and budget- friendly. 

• Covers you for a fixed term (usually 5 - 30 years).

• Fixed premiums and a guaranteed death benefit if you pass during the term.

• No cash value - purely for protection. 

• If the term expires and you’re still alive, coverage ends with no payout.

• Ideal for temporary needs like income protection, mortgage coverage, or family security.

• Provides higher coverage amounts than other life insurance options. 

Whole Life Insurance

Provides lifetime coverage with a savings component, making it a long-term financial tool.

• Covers you for your entire life (as long as premiums are paid).

• Builds cash value over time and grows tax deferred.

• You can borrow or withdraw from the cash value - but unpaid loans will reduce the death benefit.

• Higher premiums than term life insurance, but it guarantees a payout.

• It can be sold if you no longer need the policy.

Universal Life Insurance

• A flexible, permanent life insurance option that lets you adjust coverage as your financial situation changes.

• Lifetime coverage with an adjustable death benefit and premium payments.

• Accumulates cash value, which can be used to pay premiums.

• Withdrawals or loans from cash value reduce the death benefit.

• Premiums may be lower than whole life insurance but depend on policy performance.

• Good for those who want flexibility in their financial planning.

Variable Life Insurance

• A permanent life insurance option with investment potential - but also risk.

• Includes a cash value component that can be invested in stocks, bonds, or other assets.

• Market performance affects cash value – has potential for growth but also losses.

• Higher risk than whole or universal life due to market fluctuations.

• Often comes with management fees and other investment-related costs.

• Best for those comfortable with investment risk and long-term growth potential.

We’re Here to Help!

Life insurance might not be top of mind; however, opening a policy while you’re young is a smart move. Lower premiums, financial security, and peace of mind - it all starts now. Whether you're protecting loved ones or planning for the future, locking in coverage early gives you more options and savings. 

If you want to learn more about life insurance options through the credit union or prefer to speak with one of our financial advisors, we’re happy to help. Please stop by any of our convenient branch locations or call 248-322-9800 extension 5 to speak with a representative today. 

 

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