SO Affordable! The Average Cost of Life Insurance for a 20 Year Old and UP Will Shock You!
The average cost of life insurance for a 20-year-old is far more affordable than you think! For some reason, people really overestimate this figure. It’s one of those things I have to battle as an independent agent.
Well I have some very pleasant news for you. Life insurance in your 20’s is cheap!
But even with this information, I imagine a lot of people question why someone in the ’20s would even consider life insurance. Ahhhh come on I’m just trying to sell ‘ya some more coverage…right?
Wrong! There are some very good reasons why people need life insurance in their ’20s and I’m gonna share them with you right now!
But Why Would You Listen to Me Anyway?
Well to start off I’m the founder of Policy Architects, a small independent life insurance agency based out of Toronto. My goals are to provide fantastic information for people looking for life insurance.
One of the most difficult things about coverage is finding enough intel to speak with an agent from a position of knowledge.
Honestly, to get the best possible deal for anything you buy you need a good foundation when it comes to the cost, the product and the nuances BEFORE you speak to a sales person.
This isn’t any different for life insurance. My wife and I ran into this issue when we first bought a policy.
There is just so much information out there. This is why I’m writing this blog. I want to provide clients with a one-stop-shop for simple, concise information about a very complicated topic.
Average Cost of Life Insurance for a 20 Year Old
One of the biggest misconceptions out there is that life insurance is VERY expensive.
For some reason, people expect to pay more. This is why it’s so important for me to get the word out. Life insurance coverage – especially term – is extraordinarily affordable.
It makes sense. Life insurance is a business and that business is based on risk assessment. The closer you are to death the more expensive your life insurance premiums will be.
If you’re an insurer you want your underwriters to straddle the line between being permissive enough to gain business and strict enough to keep your company from bleeding money because you take on too many people who receive a payout.
So if we are looking at the Average Cost of Life Insurance for a 20 Year Old, you can imagine insurers view them favorably as long as they’re in excellent health.
Let’s take a look at some sample term life insurance rates by age to get a better idea of how this works! For this example, I’m using healthy women from 20 – 30 years old with a preferred rating. I selected a 30 year term because they want inexpensive coverage in place while they raise a family.
EMPIRE LIFE INSURANCE RATES
Preferred Rating, 30 Year Term
|20 Year Old Female||$25.20||$45.90|
|21 Year Old Female||$25.65||$45.90|
|22 Year Old Female||$25.65||$45.90|
|23 Year Old Female||$26.55||$46.80|
|24 Year Old Female||$26.55||$47.70|
|25 Year Old Female||$26.55||$48.60|
|26 Year Old Female||$27.90||$51.30|
|27 Year Old Female||$29.70||$54.00|
|28 Year Old Female||$31.05||$56.70|
|29 Year Old Female||$32.40||$59.40|
|30 Year Old Female||$34.20||$62.10|
*Quotes above are for Empire Life 30 Year Term, monthly, Preferred Health Class, non-smoker. Your rates may differ depending on your unique circumstances. October 2019.
Sample Term Life Insurance Rates: Affordable Life Insurance 20 - 30 Years Old
Do you see those prices? The Average Cost of Life Insurance for a 20 Year Old…and up is really good!
When you take into consideration the average Canadian spends about $1600 per year on coffee you can see how affordable life insurance is when you are young and healthy.
So for less than $45.90 per month our 20 year old client gets $1 million of coverage until her 50th birthday! This protects her during her most vulnerable period when she may have a family.
Not to mention an option to convert her term to permanent coverage provides my client with guaranteed future insurability.
Even if she wants term coverage at 50 years age, there are still life insurance companies that will give her 30 year term for a reasonable price if she is in good health.
As You Can See Rates Don't Radically Change Throughout Your 20's, But There is an Increase
The cost of life insurance premiums are pretty stable though your 20’s, but there is definitely a slight increase. Also remember, what seems like a small increase over a short period can build up through the years.
This is why it’s so important to do your life insurance planning EARLY. It can save you a lot of money. So let’s take a look at what happens throughout your 20’s:
- Life Insurance Ages 21, 22, 23, 24 & 25: The premiums are pretty even across the board. Sure you can save a bit the earlier you apply but it’s nothing substantial. Please remember these rates are based on being in GREAT health. If you have medical issues you can expect to pay more.
- Life Insurance Age 26: This is where you start to see a steeper increase with Empire Life. Our 26 year old client pays $51.30 for $1 Million of coverage for 30 years. This means she will shell out $1944.00 more than the 20 year old client over her term. Not a lot but still worth looking at.
- Life Insurance Age 27: We see another increase here. So premiums cost this client $54.00 per month or $2916.00 more than the 20 year old client.
- Life Insurance Age 28: Another small increase. Premiums cost this client $56.70 per month or $3888.00 more than the 20 year old client
- Life Insurance Age 29: Premiums bump up again costing this client $59.40 per month or $4860.00 more than the 20 year old client.
- Life Insurance Age 30: Now you can really see a significant difference. This client pays $62.10 per month or $5832.00 more than the 20 year old client.
Now see in black in white how quickly life insurance affordability changes. But that’s not all, as I mentioned above everything depends on your rating….
Average Cost of Life Insurance for a 20 Year Old & Up - Your Health
If you read my blog, you know that your health plays a big part when it comes to your premiums. Life insurance is a business which means underwriters make it their business to get to know everything about you.
If your health ailment impacts your longevity the insurer factors that into your monthly payments and you pay more.
Over 20 or 30 years this can really add up. So you want to find the best life insurance company for your particular circumstances.
The good news is most of us are healthier than we think. For example, if you happen to have a medical condition such as high blood pressure that is well controlled, it’s unlikely to create a terrible situation for you.
Hey, don’t get me wrong, a drop in a rating class means you’ll pay up to _____% more but there are ways to mitigate these costs. At Policy Architects we go the extra mile to make sure you get the best possible rates for your circumstances.
Give us a call we can help.
Here are a couple of examples to give you a better idea of how this works.
Empire Life Insurance Term 30, $500K Coverage for a 29 Year Old Male
This client has some health issues that knock him out of the running for a preferred or preferred plus rating.
Because he came to Policy Architects, we shopped around his circumstances to see which life insurance company is the best fit.
After some serious legwork we get him covered by Empire Life at a standard rating. Because of his particular circumstances, we are happy he wasn’t rated.
Empire Life Insurance Term 30, $500K Coverage 29 Year Old Male
"Preferred Plus Rating"
This client is in excellent shape and qualifies for preferred plus rates. Awesome! As you can see the rates are definitely different but not radically.
The thing you need to remember is that this is factored over 30 years. So if you add the savings up over time the drop in rates even for someone who is 29 years old is meaningful.
As you get older the differences become even more significant…and if you are a smoker those rates skyrocket.
Something to Remember About Rates....
Did you know I don’t use preferred rates when I speak to clients?
Nope! This is because they are not the typical result. I used preferred quotes in this article because we are talking about 20 somethings and you have a much better chance of qualifying for this class…
….but the truth is most people aren’t in optimal condition – EVEN WHEN THEY ARE YOUNG.
The good news is 80% of the population qualifies for standard or higher and out of that 80% only 10% will be issued a preferred rating. Sadly it’s not all in your control either. A family history of health issues can knock you out of the running even if you are a marathoner.
This is why it’s so important to find the right fit when it comes to the life insurance company you select
That poor health, age, medication needs and genetics can inflate costs is a definite bummer, there’s really no case against having life insurance if you have relied-upon income, and want some financial safety net for your loved ones should you die.
The younger you get life insurance, the lower your premium will likely be, yet this once standard investment isn’t being embraced by millennials the way it was by previous generations.
“Nearly 60 percent of millennials are not carrying any life insurance, but they should be considering it,” says Scaturro. “There is a big cost for waiting.” How much life insurance do I need?, NBCNews.com
Average Cost of Life Insurance for a 20 Year Old & Up - Selecting the Right Company
If you take nothing else away from my articles I want you to know that not all life insurance companies are created equal. This is one of the main reasons you should consult an independent life insurance agent.
We’re not tied to an insurer, so we have the freedom to peruse offerings from the best companies in Canada.
Did you know some insurers are far more lenient for specific medical conditions than others? Yep! They all have a niche. For example, Ivari is known to have a lenient approach to the build chart (your height and weight ratio).
So if you carry a few extra pounds they may be the insurer for you. But that’s not Ivari is less approachable for older people looking for term coverage. It really depends on your unique circumstances.
…and to top it off these goalposts are constantly changing with advances in science and medicine. So you need an agent that keeps abreast of these matters.
Your choice of company can literally cost or SAVE you thousands of dollars. Give us a call at Policy Architects we can help you find the best life insurance company for your circumstances.
The Average Cost of Life Insurance for a 20 Year Old & Up
Why Would Someone So Young Need Life Insurance?
Life insurance in your 20’s is just silly, right? You’re in your prime and have a full life ahead of you. What a waste of cash.
Ummmm no. You can’t generalize about people OR their situations. In fact, life insurance in your 20’s is recommended for a number of reasons.
One of the things I love about my job is the changeable nature of each and every case.
People come to see me from every walk of life. Some are wealthy and looking for ways to protect their estate from excessive taxation, others are simply looking for a small policy to cover final expenses, while still others need 30 year term to protect them while they are most vulnerable.
It’s awesome. But one thing I do know is that you can’t use stereotypes. Here are some very solid situations where life insurance is recommended in your 20’s.
The Average Cost of Life Insurance for a 20 Year Old & Up: Protect Your Family
…and this is more complicated than meets the eye! Life Insurance can protect your birth family and/or it can protect your chosen family.
As I mentioned above everyone lives very different lives. Some people wait until their 40’s to get married and have kids while others start VERY young. If you have children in your 20’s then life insurance is one of those things you absolutely need to consider….
…especially if you have a mortgage, debt and are responsible for paying the bills.
Sure you’re young and fit but things do happen. Why not take advantage of your good health, get some great rates and lock in for 30 years? There’s no better time to make sure your premiums are SUPER affordable.
College & University Cost a Pretty Penny. If You're Not Around Who Foots the Bill?
Another situation that fits your 20’s is protecting your parents from your college debt. Let’s say you decide to go to law school in the states and your parents cosign your loans so you get some terrific rates.
The deal is as soon as you get that high paying job you’re going to take over the monthly payments.
But what happens if you get sick and die? Your parents will be held responsible for the money owed. A simple term policy will make sure that won’t happen.
Young and single 20-somethings probably haven’t thought much about life insurance, and that’s OK. If you’re 25 with no debt you probably don’t need a life insurance policy, Ginty says.
But if you’ve co-signed a student loan with your parents, you may want to consider getting a life insurance policy because you have a financial obligation that could impact your parents. If you suddenly died, some private lenders have clauses in their contracts that require the loan balance to be repaid immediately. Your family may need a life insurance payout to cover that debt.
Or perhaps you help support other family members — siblings, parents or grandparents. What happens to them if you aren’t capable of covering their expenses? Do they depend on your income? If so, then taking out a policy is a good bet.
The Average Cost of Life Insurance for a 20 Year Old & Up: Entrepreneurs
See what I mean!
There are so many variations when it comes to life. Another great example is entrepreneurialism. It used to be people took traditional career paths. Not so anymore.
It’s very possible that a 20 something owns a VERY successful business. If that’s the case there are corporate interests they may want to protect and life insurance provides the perfect vehicle to do this.
The right life insurance plan makes sure that your death won’t allow the company to spin out of control. This assures financial protection for partners, employees, and clients.
Banks may also require some sort of protection for loans. A term policy may be one of the requirements for getting the funding you need.
Life insurance and business are terrific partners. Why not give Policy Architects a call to see how we can help?
The Average Cost of Life Insurance for a 20 Year Old & Up: Future Insurability
As I mentioned above, life is typically good in your 20’s when it comes to your health. This can change radically as you age. Locking into protection while you’re young and fit can actually protect you later in life.
If you buy a policy that has a guaranteed insurability rider you can maintain protection, even if your health circumstances change…
…without applying again or providing proof of insurability.
Another perk? If your policy has a conversion option you can opt into a permanent policy without having to provide proof of insurability if you want continued coverage past your term.
What Type of Insurance Does a 20 Something Need?
Whether you are looking at the Average Cost of Life Insurance for a 20 Year Old & Up or any other age group, there are two main types of life insurance:
- Term Life Insurance
- Permanent Life Insurance (there a lot of variations of these kind of insurance which I am not getting into here. It’s a complicated products so please be sure to call Policy Architects today if you are considering it.)
Term coverage is the most affordable option for those of you in your 20’s. For most people, most of the time term it’s the way to go. It gives you protection during a specific period and covers income replacement.
Permanent insurance typically has a cash value accumulation feature and costs a lot more because a payout is guaranteed as long as you keep up with your premiums.
Covering premiums can be a serious issue especially for 20 somethings. You never know what the future holds and if payments become impossible due to unforeseen events you may lose your coverage and investment. Sadly this happens to far too many people.
Don’t get me wrong – there is a time and place for permanent life insurance, but you really have to fit a specific niche such as:
- you happen to have an estate that needs to be protected from excessive taxes
- Tax shelters are maxed out and you need something new
- you have a business or a child with special needs
Then permanent coverage may fit the bill.
Just remember permanent insurance is a complicated product with a lot of nuances. Not to mention the fact that it’s a huge investment. You need to get some seriously good advice before you sign on the dotted line. Call Policy Architects today!
How Much Coverage Does a 20 Something Need?
Appropriate coverage is always an important topic. I think a lot of people vastly underestimate how much money is needed to maintain their lifestyle.
That’s why a needs analysis is critical. Especially in your 20’s when everything is in flux.
A good independent agent will not only review how much coverage you need to protect your family and loved ones TODAY…
…they also take into consideration your future goals.
For example, maybe you’re making $50K per year. So you think that $500K of coverage is more than enough. Hey, you’re taking our advice and obtaining 10 times your salary in protection after all!
The thing is you got a 30 year term and your income will substantially increase over the decades. You anticipate earning over $150K by the time you’re 40. Now your policy leaves you incredibly underinsured.
No problem! You apply for another policy for more protection…
…BUT your health has declined and you went from preferred rates to a standard rating. Ouch! Now your coverage is going to cost you a bomb. A great agent would have discussed your goals and created a policy that covers today and your future.
This is Why You Need Policy Architects On Your Side
The Average Cost of Life Insurance for a 20 Year Old & Up is super affordable. Policy Architects can help you save money AND plan for the future.
One of the lynchpins of success is foresight. Thinking ahead can literally save you thousands of dollars.
I think most of us – and this includes me – plan as the need occurs.
When it comes to life insurance nothing is more costly. Unfortunately, I have met far too people who wait for medical issues to arise before they contact me.
Sometimes it works out just fine and we are able to get them some great coverage…
….other times I have to break the news that protection is out of reach unless they choose guaranteed issue. This is a call I hate to make.
If you are in your 20’s we review your goals and get you some awesome coverage that fits your present and future needs. Remember, locking into low rates now can really save you thousands and enable you to access coverage without evidence of insurability if you play your cards right.
Call Policy Architects TODAY!