Let’s face it, after receiving that diploma, many college graduates think about getting their own apartment or buying a new car, not buying life insurance. There are, however, many benefits to buying life insurance when you’re young, even if you don’t yet have financial dependents.
Here are three reasons recent college graduates may need life insurance protection:
If someone co-signed your private student loan –Your co-signer is responsible for paying off the remaining balance if you die. By taking out a life insurance policy (at least as big as the loan) and naming your co-signer as the beneficiary on your policy, you can help protect them from this financial burden. Heck, the co-signer might even pay the premium for you.
Lock in insurability – Life insurance rates are often the cheapest when you’re young and generally healthier, rates go up dramatically as you get older - plus, if you develop a chronic illness later, life insurance becomes even more expensive or companies might deem you “uninsurable.” Recent college graduates who purchase a life insurance policy now can set the stage for insurability in the future if the policy offers a conversion privilege.
Life insurance rates can be affordable today – Rates are often the best that they can get for people in their 20’s, so even if you’re not making a lot of money yet you’ll probably be able to fit it in your budget. Life insurance becomes even more important as life goes on. It's advised that you purchase now, since rates increase as your age progresses.
Term life rates remain the same for 10 to 30 years, depending on the policy you choose. Permanent policies, with level premiums for life are also available, but premiums do tend to be higher.
Maybe life insurance won’t be the first thing you buy after you graduate, but you really should consider it. Not sure which type of coverage is best for you? Don’t worry, an insurance professional can help you sort it all out. Take the time to tackle this issue now. You’re future self will thank you!
When it comes to life insurance, many people rely on what is offered through their employer, and that may not be enough.
An often-heard refrain is, “Buy term and invest the difference.” Others say, “Why rent (term), when you can own (permanent)?”
Understanding your options can go a long way to ensuring that you have the right type and amount of coverage.