Why to buy life insurance when you are young

Most of us never think about life insurance when we are young – and for good reason – we are too young! But is taking out a life insurance policy when you are young a waste of time or could it be a smart move?

Life insurance isn’t a pretty subject, it’s one that makes us mere mortals come face to face with the reality of death but for those in their twenties, with no children, the end isn’t a concern for now. But regardless of our current carefree lives, is this one subject we should be giving more thought?

Life insurance policies broken down

Life cover – In the case of death, life cover will insure the policy holder by paying out a lump sum to the policy holder’s beneficiary upon death.

Total and permanent disability (TPD) cover – If unforeseen circumstances see the policy holder permanently disabled, this policy will cover rehabilitation costs and  future costs of living. This cover is usually bundled together with the life cover.

Trauma cover – Dealing with trauma is physiologically depleting but can also come at a large cost to you financially. If the policy holder suffers from an illness or injury, such as cancer or a stroke, which impacts their lives significantly, trauma cover can help cover the financial burden.

Income protection – If you get sick or are injured and unable to work, income protection insurance will cover your wage for a period of time, depending on your cover.

Policies for young singles

While a lot of people assume life insurance is just for families or for the older generation there are specific life insurance policies designed for young singles.

Life insurance for young singles is design to cover life’s unexpected accidents, such as illness, injury or unexpected death. If you were faced with a debilitating illness that prevented you from earning an income, how would you survive?

Policies for young couples

You don’t have to have children to start thinking about life insurance. When you are in a committed long-term relationship it’s likely you will become dependent on each other, so if one of your circumstances change dramatically, both of you could be affected.

If one of you were unable to work this could have a very sudden, financial impact on your life. Likewise, in the most unfortunate event that your partner passed away, how would you cope with the mortgage repayments, bills and debts you’ve accrued, on your own?

Save on your policy pricing

Life insurance policy prices take into consideration many factors including the type of policy, what the policy covers, the amount you’ve elected to cover and finally, your health and age.

The younger and healthier you are, the less risk to an insurance company you are, which could mean a lower policy cost. If something were to happen to you later on in life, the cost of the policy could still reflect the price of when you originally signed up for the policy. Whereas, if you were to sign up later on in life, the initial policy costs are likely to be a lot higher.

There are two main types of life insurance premiums to consider; stepped and level. A stepped premium is usually cheaper when you initially sign up but the premium will increase each year. A level premium is a bit more expensive when you initially sign up but the premium does not increase as you get older.

At the time of writing, Allianz offered life insurance for young singles starting at $2.50 per week (based the premium of a 34-year-old male non-smoker with $100,000 life cover). Suncorp offered up to $1 million in a lump sum payout, upon terminal illness or death, for their life insurance policy and a 10 percent cash back every three years. And AAMI advertised one month’s free cover when you sign up for their life insurance cover.

Taking out a life insurance policy is entirely up to the individual and your circumstances but just remember, your current circumstances won’t remain the same, so make sure you prepare for the unexpected and do lots of research by comparing life insurance policies, before you sign up for one.