Navigating your 20s comes with its fair share of challenges. There’s the excitement of graduating, maybe heading to college, and landing your first real job. But there are also the realities of student loan debt, helping with family expenses and figuring out what you want to do with your life as you approach your 30s.

Term life insurance may not be the first thing on your mind, but it’s worth considering as a way to protect the people you care about. It’s like a safety net for your loved ones, ensuring that your responsibilities don’t become financial burdens if something unexpected happens to you.

When you’re young and healthy, term life insurance may be much more affordable than you think, providing coverage for the years you and your loved ones need it most. Here’s what to know.

Term Life Insurance: The Basics

Younger generations recognize the value of protecting their financial future. A recent study by LIMRA (Life Insurance Marketing and Research Association) found 44% of Gen Zers plan to buy life insurance in the next year. If you’re one of them, term life insurance can be a key part of your plan.

But what is term life insurance, exactly? And why should it matter if you’re young?

What Is Term Life Insurance?

Term life insurance covers you for a specific period or term from 10 to 30 years. If you pass away during that term, your beneficiaries (the people you choose) receive a payout, known as a death benefit. Your loved ones can use this money to cover expenses like paying off the mortgage to keep your family in their home, raise children, even set aside college funds.

Term vs. Permanent Life Insurance

Term life insurance is popular because it’s typically more affordable and straightforward. It provides coverage for a set period, often when you need it most—when you’re building a career, starting a family or buying a home.

Permanent life insurance offers lifelong coverage and builds cash value over time. While it has many benefits, it’s generally more expensive and may not be the best fit for your current needs and budget.

Understanding the difference between term vs. permanent life insurance coverage will help you pick the right policy for your needs.

Why Term Life Insurance May Make Sense for You

Here are some reasons why you may want to consider term coverage as you’re exploring insurance options:

• Protection: Make sure your loved ones don’t stress about money if you’re not around to support them.
• Flexibility: Choose the coverage amount and term that fits your current situation and budget. You can always adjust later as needs change.
• Affordability: Term life insurance rates can be very affordable when you’re young and healthy. You can lock in low rates now and have coverage for decades.
• Convenience: Many companies offer no-exam term life insurance policies, so you can get covered quickly and easily without a medical exam.

Identifying the Right Life Insurance Coverage for Your Needs

Many young adults like you are in similar situations. While only 40% of Gen Zers say they have life insurance, almost half recognize they need it or more coverage.

If you feel term life insurance is a good fit for you, the next question you may have is, how much coverage do I actually need? There is no one-size-fits-all answer.

Ask yourself these questions to help find the coverage that fits your life.

• Who depends on you? Do you have a partner, children or aging parents who rely on your income? Their potential financial needs could be a big factor in determining your coverage amount.
• How much debt do you have? If you have car payments or credit card debt, these financial obligations don’t necessarily disappear if you’re gone. Life insurance can help ensure they don’t burden your loved ones.
• Do you want to leave a legacy? Maybe you’d love to fund a younger sibling’s education or leave a generous gift to a charity or organization close to your heart. If so, factor those costs into your coverage amount.
• What’s your income? Whether you’re the primary earner for your household or not, consider how much your loved ones would need to keep their lifestyle if your income isn’t there.

LIMRA’s study also found that single parents and young families have a particularly high need for life insurance.

Life changes fast. A new job, a growing family, a mortgage—these milestones often bring new financial responsibilities. Term life insurance can help you adapt and ensure your loved ones are protected every step of the way.

How Much Does Term Life Insurance Cost?

Insurance companies use a lot of different factors to determine your premium, which is how much your coverage costs.

These are some of the main ones:

• Your age: Generally, the younger you are, the lower your term life insurance rate will be.
• Your health: If you’re in good health, you’ll likely qualify for lower premiums.
• Coverage amount: The higher the death benefit you choose, the more your premium costs.
• Term length: Longer terms typically come with higher premiums.

Consider limited-coverage (in some cases up to $500,000) term life insurance policies if you’re looking for budget-friendly options or have minimal financial obligations. These offer basic protection at a more affordable price, usually with a limited death benefit and a simpler application process.

Busting Life Insurance Myths and Common Questions

Life insurance might not be the most exciting topic, but there’s a lot of misinformation out there that can make it seem even more confusing.

Here’s the truth behind these misconceptions and answers to common questions.

I’m young and don’t need coverage.
Even if you’re young and healthy, accidents happen, and life throws curveballs. If you don’t have dependents right now, think about your parents, siblings or close friends. Life insurance is for today as well as the future. Maybe you don't have a spouse or children or a mortgage right now, but you may in the future and having a policy already in place can help give you peace of mind when life changes do occur.

It costs too much.
You may assume life insurance is out of your budget. But the truth is, term life insurance rates can be surprisingly affordable, especially when you’re young and healthy. The average cost of $500,000 in coverage for a 20-year term policy for a healthy 30-year-old is less than $20 a month. And the rates are slightly lower the younger you are.

I’m single with no kids.
Life insurance can still be valuable even if you don’t have dependents right now. It can cover your final expenses, like funeral costs, so your family doesn’t have to worry about paying for it. You may also want to leave a death benefit to your parents to help them with their retirement.

I need a medical exam.
Not always! While some policies require more in-depth health questions and medical exams, many insurance carriers offer no-exam term life insurance. This means you can get covered quickly without worrying about needles or doctor visits.

Does term life insurance have cash value?
Permanent life insurance policies have a cash value component, which grows over time. Term life insurance is not permanent and doesn’t have cash value. It’s purely about providing a death benefit to your loved ones. This is one of the reasons it’s so affordable for young adults.  

Can you borrow against term life insurance?
Term life insurance doesn’t have cash value, so you can’t borrow against it like you might with some types of permanent life insurance. Term coverage is designed to be simpler and more straightforward than permanent policies.

How do you use term life insurance for retirement?
Retirement may seem a long way away in your 20s, but it’s never too early to plan. Life insurance is primarily about protecting your loved ones during your prime working years. However, it can also play a role in estate planning. Here are a few ways term life insurance can help:

• Safety net for your partner: Imagine you and your partner are planning for a comfortable retirement together. If something happens to you, a term life insurance policy can give them a lump sum to help cover living expenses, pay off the mortgage, or even supplement their retirement income.
• Leave a legacy: You’re working hard to build a future for yourself. Term life insurance can help make sure that your loved ones inherit your assets, not your debts. It can also be a way to leave a meaningful legacy for your children or grandchildren, helping them achieve their dreams.
• Help business partners: Many Gen Zers are entrepreneurs or have side hustles. Term life insurance can protect your business partners or employees, ensuring the continuity of your ventures even if you’re no longer there.

So, even though retirement might seem very distant, term life insurance can help you prepare for your future and the future of those you love. It’s about securing not just their immediate financial needs but their long-term well-being, too.

Find the Coverage That Fits Your Needs

Life insurance is a tool that helps you plan and prepare for the future, helping ensure your loved ones don’t have to worry about unexpected financial burdens if you’re not there to support them.

Life is full of possibilities, and you’re just getting started on your journey. Term life insurance offers a way to embrace those possibilities with confidence, knowing you’ve taken steps to help protect the people you care about. Explore your options and compare quotes to find a policy that best fits your needs.