When you’re young, you have all the time to explore, which makes life insurance for 20-year-old people an exciting deal. In your 20s, you’re probably familiar with insurance policies, having considered and bought car insurance, travel insurance, health insurance – and maybe even home insurance. But, while you’ve kick-started your career, planned your next holiday, or looked to buy your first house, it’s unlikely you’ve considered buying Life Insurance.
Why would you? There might not be a lot you think you need to cover and you may have no dependents, you’re young and healthy and it is unlikely you’ll become permanently disabled or pass away any time soon.
While life insurance for 20-year-old youngsters might not be on your mind, here’s the real thing – the younger you start, the cheaper it gets. Your debts do not become a burden on your family in case of a mishap, and the fund could be utilised to pay off any mortgage your family owns.
A Life Insurance policy is integral to building a long-term wealth strategy. Buying a policy now might not seem completely necessary, but there are a number of key benefits to buying your insurance while you’re young and healthy and might not think you need it.
Life Cover: This will provide a lump sum payout to your family or nominated beneficiaries in the event (however unlikely) of your death. Your parents can plan the funeral without taking apart their own savings fund.
TPD Insurance: Total and Permanent Disability insurance (TPD) will provide you a lump sum payout in if you are injured and become permanently disabled. This will help pay for medical costs and rehabilitation and to settle any debts you may have. Even if you don’t have any dependants, it would make a great difference in your life knowing that your parents are not slowly going poor from your student loans or bad debts.
Trauma Insurance: Trauma insurance is also known as critical illness insurance. This type of insurance will pay out a lump sum if you’re diagnosed with a serious medical condition.
Income protection insurance: Income protection will provide you with regular payments of up to 75% of your regular income if you’re injured or become ill and are unable to work over a period of time.
Getting income protection life insurance for 20-year-old young people does not always stem from concerns about their own death. It could also be looked at as an investment – a safety net to catch you if you stop getting your salary.
You can also buy your insurance policy as a couple which will offer a five to ten per cent discount on your premiums and will provide protection if one of you is no longer able to contribute to a joint income, or does not work and relies on the other’s income.
While you may not yet have a family of your own, you probably do have student debts, a loan to buy your first car, or credit card debts that have been built over the years.
In the event of your death or a serious injury, it’s your immediate family who will be left to pick up the pieces, all while trying to cover the cost of your health care, or worse, while grieving their loss.
A life insurance policy will also help cover the costs of your funeral to ensure your family isn’t left out of pocket.
To move away from thoughts of your own mortality, there are some significant and generally unknown financial benefits of buying life insurance young.
When you’re young and healthy your premiums will be much cheaper as you are at low risk of death or injury. It will cost you less in the long run if you buy young.
You can select a lower premium level that you’ll keep for life, bar your insurers’ price increases due to inflation. Click here for more on level vs stepped premiums.
Life insurance will also improve your credit rating when you’re taking out a loan and can help you secure a mortgage for your first home.
With a lump sum benefit payout upon death, your family will have enough money to pay for funeral costs, relieving them of one more burden in stressful times.
Life insurance is flexible so you can increase the benefits at a later stage if you wish.
You have critical illness built in cover for your children if you take out life insurance.
Besides life insurance for 20-year-old employees, small business owners also need business insurance. If you’re kicking off your career as an entrepreneur and starting up your own business, you may also need to consider business expenses insurance to protect your business in case you become ill and are unable to work.
Business expenses insurance can cover up to 100% of your business costs to keep your business running while you’re unable to work. Add life insurance to your portfolio, and give your family that extra level of security.
One of Wealth Smart’s qualified and experienced financial advisors can help you by discussing all the options when buying a life insurance policy in your twenties. Our advisers share their expertise to identify the right policy for you at the best price! They address issues life taxation, premiums, family pay and more. Get in touch with us to learn more about getting life insurance for 20-year-old people. Call us at 1800 765 100.
In-depth target market determination determines that the younger you purchase a personal insurance policy the cheaper it will be. Private health cover at a younger age is also more advisable because you’re less likely to suffer from a critical illness or terminal illness.
Additionally, if you are the victim of an accident, you will have the financial support of a lump sum payment from certain policies to ensure one less worry to deal with.
Another benefit of taking out cover when you’re younger is that the life insurance premiums will be more affordable, so ensure that you are calculating life insurance premiums according to your present age when you look for an automatic quote online.
Life, TPD, trauma and income protection premiums are calculated using your age. The younger you take out a policy the cheaper it will be. Other factors such as occupation and gender are also required for an accurate quote.
Use our calculator to find out how much your cover will cost. You can run a personalised quote on life insurance policies to see what you can afford.
Remember that life insurance tax deductible benefits may apply. However, always check with our life insurers to explain the tax benefits of life cover and income protection insurance before making a decision. Also, ensure that you take life insurance costs seriously so that you know you will be able to afford the premiums.
No different to any other policy, whether you are holding it for 2 years or 20 years. Every year you receive a renewal notice which will include the amount that you are covered for and your premium.
You are never locked into a policy for 20 years but regular reviews will keep you updated about your life insurance cost, allowing you to make changes as and when necessary, depending on your changing personal circumstances.
You can use the calculator to determine how much life insurance premiums will cost you. However, note that the calculator provides a good estimate of costs, but it is necessary to speak to a life insurer when taking out life insurance. A discussion with an expert will determine the cost of your life insurance premiums.
Whether life insurance premiums and lump-sum payouts are tax-deductible or whether other insurance products come off your taxable income, are all questions that your insurance adviser will discuss with you.
Private health insurance covers you when public health services do not, so it is always advisable to take out private health insurance to protect yourself because few people can predict the future. To avoid financial hardship and provide you with a lump sum benefit to cover other living expenses should you lose your job, it is advisable to take out critical illness cover or an income protection insurance policy.
Because you never know when you’ll need medical treatment or have to meet mortgage repayments after the loss of income due to an unfortunate incident, it is better to plan your financial future today.
An insurance expert will help calculate how much money you will need if your health fails and have to stop working. With this knowledge, you can determine how much life insurance you need and how much you can afford to pay on trauma insurance.
Once you decide on a policy type or several policies, life insurers will recommend you read each policy’s product disclosure statement thoroughly, before signing it.
When you get to a certain age, you may think of getting married and having children. Before you reach this point, take the time to plan your financial future. Should you lose your job due to total and permanent disability, you will lose your regular income. Or, you may suffer from a serious illness that prevents you from earning a living.
As horrible as it is to think about such disasters at the best time of your life, it is necessary. No matter your personal circumstances, if you have children, you will still need to pay school fees. You will also need a lump sum payment or regular monthly benefits to pay for medical treatment and other living expenses.
Before you write off life insurance or income protection insurance, speak to a registered private health insurer about how much critical illness cover you need. Also, talk with the experts about the level of life insurance or income protection you will need to survive over and above any help you receive from the Australian government.
A financial adviser will cover all your insurance policy exclusions. Most life insurance and other insurance products require a medical history. If you’re honest about your past medical history, the adviser will fill you in about specific exclusions in relation to specific policies.
Most policies will, however, exclude self-inflicted injuries, pre-existing medical conditions, suicide, and injuries relating to war and high-risk sports or high-risk jobs. You can discuss all these factors with an insurance expert to check which insurances policies will work for your specific personal circumstances.
Should you need to make a claim against an existing life insurance policy or for permanent disability tpd insurance, you can speak to your insurance adviser. You will need to undergo a medical check-up for a disability claim or any claim relating to a critical illness. Your insurance adviser will advise on which medical experts to see to complete claim documentation.
Once the medical examinations are complete and have been submitted to the insurance company, they will check that the claim is in line with the trauma cover or recovery insurance. The insurance company will additionally determine whether you can claim against your superannuation fund or another insurance policy.
These claims are also typically subject to a waiting period, which depend on individual and policy terms and conditions.
But once approved, you should receive your lump sum payment within a short period.
The answer to this question is simple. If you don’t take out a life insurance policy or trauma cover before you reach 30, it will be more expensive.
The Australian government and companies that deal with private insurance for health encourage you to avoid this unnecessary expense, which could be as high as 10 per cent more than when you’re 30 and under. This figure can rise to as much as 70 per cent from 65 years and upwards.
In short, the sooner you begin your financial planning, the more capable you will be of covering living expenses should you be unable to work or suffer from a terminal illness later in life.
How much life insurance you will need or other life insurance products will be necessary to achieve this goal, will depend on your financial situation. How much cover will be appropriate will also be an issue, which a chat with a tal life limited abn can help resolve.