Starting out on your path to successful investing in might seem overwhelming but there’s no need to worry. Millions of people have traveled down the same road as they navigated booms and busts, war and peace, major life events, and every twist and turn life can throw at you. With patience, discipline, and a calm temperament, you too can weather the storm and come out on top.
Building a strong financial foundation in your 20s begins with having the right tools. A budget is one thing you’ll need, especially if you’re focused on building an emergency fund, saving for retirement or paying off debt. Life insurance is something else you may want to add to your toolbox.
Call it a pipe dream, but what those years should be known for is investing. It’s hard to overstate how valuable your 20s are, but on the long, long road to retirement, saving throughout that decade is kind of like putting an extra engine in your car. You’ll rev your returns by starting early. Investment in life insurance can be one of those investments that can help you secure yours and your family’s future.
Here are 5 factors that you should consider when investing in life insurance in your 20s:
1. Your Health is your wealth:
Most every life insurance policy will require either a physical exam or for you to answer some medical questions to determine your state of health. It probably goes without saying that the healthier of an individual you are, the less expensive your insurance policy will be. Smoking is also a big, negative factor when pricing life insurance.
Life insurance companies tend to correlate your age with your health. Therefore, the younger you are, the healthier you’re expected to be, and vice versa.
2. Review Your Insurance Needs & Decide How Much Coverage You Need
Talk to an insurance agent. He or she can help you evaluate your insurance needs and give you information about available policies.
Answer these questions — How much of the family income do you provide? Does anyone else depend on you financially? How will your family pay final expenses and repay debts after your death? Based on the answers to these questions, decide how much coverage you need, for how long and what you can afford to pay. You want to make sure that you buy enough life insurance to cover the financial effects of an unexpected or untimely death.
3. Term or Whole Life??
Relatively speaking, term life insurance tends to be less expensive when compared to permanent life insurance. With a term insurance policy, you select a term—usually 10, 20, or 30 years—over when your life is protected. When that term evaporates, if you want to maintain that particular policy a new rate is calculated, and it will increase significantly. A permanent insurance policy sets the policy in place for the duration of your life and will maintain the same fixed premium throughout the policy.
4. Do your homework regarding the Company Offering Insurance Product
It is very important for you to first check the financial history of the company offering life insurance plan. You can get the complete details either from the agent offering the insurance plan or you can check the annual reports of the company. You can also ask financial experts or check from the customers already having insurance plan of the same company.
5. Understand All the Aspects of the Recommended Product
Before finalizing the plan it is always good to clarify all the aspects of the insurance plan to make a wise decision. The prime motive of taking life insurance policy is to make sure that your family should not suffer from financial crises in your absence. So it is very important for you to understand the procedure for claiming the policy and what will happen if no unfortunate incident takes place during the tenure of the policy.
You can get a great deal on insurance if you buy while you’re young. And getting married or having kids which many people do during this time — are two of the biggest reasons to take out a life insurance policy. But buying the right insurance policy is also necessary.