The Average Cost of Life Insurance for a 20 Year Old
Will Shock You
The average cost of life insurance for a 20-year-old is far more affordable than you think!
Sadly too many people think life insurance is more expensive than it is.
….but you may also be asking yourself why the heck a 20 something would need life insurance anyway.
Let me tell you, there are some very good reasons why people need life insurance in their ’20s and I’m gonna share them with you right now!
Average Cost of Life Insurance for a 20 Year Old
One of the biggest misconceptions out there is that life insurance is VERY expensive.
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.
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!
IVARI LIFE INSURANCE RATES
Preferred Plus Non Smoking Rating, 30 Year Term
For this example, I’m using very healthy women from 20 – 30 years old with a preferred plus non smoking rating. I selected a 30 year term because they want inexpensive coverage in place while they raise a family.
Typically I use standard ratings but the is the one time in your life you will have a good chance of obtaining the best rates and cheapest prices.
|20 Year Old Female||$25.65||$43.20|
|21 Year Old Female||$25.65||$44.10|
|22 Year Old Female||$26.10||$45.00|
|23 Year Old Female||$26.10||$45.90|
|24 Year Old Female||$26.55||$46.80|
|25 Year Old Female||$26.55||$47.70|
|26 Year Old Female||$27.90||$50.40|
|27 Year Old Female||$29.25||$53.10|
|28 Year Old Female||$30.60||$55.80|
|29 Year Old Female||$31.95||$58.50|
|30 Year Old Female||$33.30||$61.20|
*Quotes above are for Ivari 30 Year Term, monthly, Preferred Plus Class, non-smoker. Your rates may differ depending on your unique circumstances. June 2021
Sample Term Life Insurance Rates: Affordable Life Insurance 20 - 30 Years Old
Do you see those prices?
Considering 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 $45.00 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 standard health. If you have more serious medical issues you can expect to pay more.
- Life Insurance Age 26: This is where you start to see a little bit of an increase with Ivari. Our 26 year old client pays $50.40 for $1 Million of coverage for 30 years. This means she will shell out $2592.00 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 $53.10 per month for $1 Million in coverage over 30 years, which means she will spend $3564.00 more over her term than the 20 year old client.
- Life Insurance Age 28: Another small increase. Premiums cost this client $55.80 per month or $4536 more than the 20 year old client
- Life Insurance Age 29: Premiums bump up again costing this client $58.50 per month or $5508.00 more than the 20 year old client.
- Life Insurance Age 30: Now you can really see a significant difference. This client pays $61.20 per month or $6480.00 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
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 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.
Ivari Term 30, $500K Coverage
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.
….and it doesn’t look like Ivari fits the bill.
There are cheaper options out there.
Ivari 30, $500K Coverage
29 Year Old Male
"Preferred Plus Rating"
The thing is my client is in excellent shape and qualifies for preferred plus rates. Awesome! As you can see the rates are definitely better!
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.
“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
Something to Remember About Rates....
- The Cheapest Quote Isn’t Always the Best Fit: It depends on the product and needs of the client. For example there are less expensive premiums available from Wawanesa ($35.45 per month). It’s always best to speak to an independent agent about all of the details before you sign the dotted line
- Men Pay MORE: This is because they are considered higher risk to insure. Ivari offers preferred plus coverage to our male client for $45.45 per month and $31.95 for our female client with the same rating.
- Health Matters: As you can see from the quotes above. The fitter you are the cheaper the rates
- Standard Rates Are the Most Common: 80% of people fall into this category
- Call An Independent Life Insurance Agent: We can save you time, money and headaches
Selecting the Right Company for YOU
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.
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.
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.
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 loans so you get some terrific rates.
The deal is as soon as you get that high paying job you’re taking 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’s 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 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.
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
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.
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.
If you are in your 20’s we’ll review your goals and get you some awesome coverage that fits your present and future needs.
The best time to get coverage is when you’re young and healthy. Don’t wait for your premiums to soar. Call us today.