When open enrollment comes around, chances are you know you need health insurance, so you dutifully pick the program that works best for you and call it a day. But there’s something else you should be paying attention to when signing up for workplace benefits: life insurance. Yep, even if you’re in your 20s.
Though you may feel invincible and a long way away from the days when you have to face your own mortality head on, the truth is harsh: sometimes the unexpected happens. And if it does, being unprepared can really complicate things for your loved ones, not to mention leave all your hard-earned assets up in the air.
Even if the unexpected doesn’t happen (fingers crossed!), there’s another benefit to getting life insurance on the earlier side: cost savings. When you enroll in a life insurance policy as a young, healthy, spirited individual, the cost is much less significant.
On average, a 25-year-old female pays just $14.35 per month for a 20-year policy, whereas a 60-year-old female pays an average of $100.55 per month for the same policy. So for about the same price as lunch, you can protect your family and your assets in case the worst of the worst happens.
Worth it? We think so. But if you’re still on the fence, here are TK scenarios in which you should really think twice about finally saying “yes” to that life insurance policy:
You have private student loan debt
Though family members won’t have to pay back federal student loans if you die—the loan simply gets discharged upon proof of death certificate—the same isn’t always true if you received a private loan. If you have private student loans, whether to cancel the debt is up to the discretion of the lender. If they do not discharge the loan, it becomes part of your estate, which can ultimately become the responsibility of your parents or a partner.
You’re an entrepreneur
If you own a business and become unable to work—or worse, die unexpectedly—the business can implode quickly, especially if there isn’t a sound and detailed plan in place. The good news: If you’re trying to secure any type of business loan, most lenders require proof of life insurance called decreasing term life insurance. What does this mean exactly? If the business owner dies, the bank is the beneficiary and will pay off the loan.
You have a risky job
Life insurance is mostly put in place in order to manage risk and protect assets in the event of an untimely death, and people with high risk jobs—firefighters, police, construction workers, pilots, etc.—are inherently more likely to end up in these scenarios. Because of this increased risk, it’s extremely important for people in these professions to secure life insurance to protect their family members from incurring their debts. Note: In these scenarios, you’ll likely pay more to be insured, but it’s worth the expense—especially if you end up needing to take advantage of the life insurance policy.
You’re an adventurer
Similarly, if you have extreme hobbies that put you in regular danger—mountain climbing, skydiving, or backcountry skiing, for example—life insurance is a good idea. Though nobody embarks on these kinds of adventures expecting something bad to happen, unfortunate events are much more likely to occur in inherently risky scenarios.
You’re getting married
When you get married and combine assets or take on new ones together—say, taking out a mortgage to buy a house—a life insurance policy for both parties is always a good idea. This way, both individuals will be protected and have a cushion to fall back on, so they can avoid going into debt. Note: When it comes to marriage, you also have the option to get a joint life insurance policy. This is most common when there are a lot of assets and the couple is attempting to minimize inheritance and estate taxes.
You’re having a baby
One of the main purposes of life insurance is to cover expenses if you die, so it only makes sense that parents with dependents are prime candidates for life insurance. This kind of insurance can cover things like the mortgage, education, childcare, and other day-to-day expenses your family relies on to live.
You take care of aging parents
Though this one isn’t talked about as frequently, it can be a great motivator in terms of getting life insurance. Why? If you care for an aging or disabled parent at home or in an assisted living or nursing facility, a life insurance policy with a long-term care rider can help offset the costs associated with that care.