Why You Need Insurance, Even if You’re Young and Healthy

Life is not always as smooth as we would like it to be. Unexpected events are inevitable and may cause hardship or prevent us from fully appreciating each day. No matter your age, whether young or old, you must be ready and equipped.

One way to ensure that you’re prepared is with insurance. We explore how life insurance can help guarantee financial security, assist with debt repayment, cover living expenses, and help with any eventual medical or final expenses if an unfortunate event occurs, even if you’re young.

What is life insurance?

A life insurance policy is a legally binding agreement between an insurance company and the policyholder. The policyholder must either pay the entire premium upfront or recurring premiums over time for the policy to remain in effect. The policy's face value, or death benefit, is paid to the designated beneficiaries upon the insured's death.

Why buy life insurance when you are young?

Age benefits you in many ways when you are young, and this is especially so when it comes to purchasing insurance.

Here are a few reasons to consider getting life insurance at a young age.

Young people are more vulnerable 

Younger people just starting their professions would have limited savings. However, they are likely to have the most liabilities and dependents. These could be grandparents who need help financially, younger siblings who need education, or parents who are getting close to retirement age. Moreover, there might be unpaid bills, education loans or a significant upcoming family event, like a wedding or the birth of a child.

It's improbable that a younger person would have enough savings to cover any sudden financial need brought on by their illness, disability, or death. Therefore, insurance is an excellent option to safeguard their family's financial security.

Besides this, life insurance can help with systematic saving planning and allocating funds for particular purposes. This will assist you in covering some necessary expenses as well as anticipated and unforeseen ones.

For example, PRUWithYou is a investment-linked insurance plan that provides life insurance and investment components to the insured. Additionally, riders such as PRUSaver and PRUSaver Kid can be added to this policy to start building your children's future from an early age.

As such, these advantages and rewards make purchasing life insurance for a person in their 20s worthwhile.

Ensure financial security of dependants (even if you don’t have children yet)

The primary goal of purchasing life insurance is to provide your family or your desired beneficiaries with financial security. Early purchases can safeguard your family and ensure they can maintain their current living standard without making any sacrifices. The payout can be used for their daily expenses, education, paying off debts and even the house mortgage.

Premiums are usually lower if you’re young and healthy

Being young and healthy can make it easier to obtain life insurance coverage as a young and healthy person possess lesser risk. Your age and health at the time of application are factors insurance companies use to offer and price life insurance policies.

Additionally, it may be advantageous to purchase life insurance before unanticipated changes in health occur. Insurers also base pricing on your health and estimate your likelihood of remaining healthy. As such, you may have to pay a higher premium if you have a medical condition.

Expenses increase with age

As you age and advance in your job, your expenses will inevitably rise. If you purchase a home, especially if you want to marry and have children, you’ll likely be spending more, even if it’s only on necessities.

Your life insurance coverage should expand to reflect these changes. If you purchase life insurance before these various life phases, it will be less expensive to review and tweak your policy over time than buying a new one later in life.

You can reduce future insurance expenses by taking advantage of lower premiums when you're younger.

Enjoy compounding benefits

Compounding increases wealth by reinvesting the initial capital and interest earned on it. You are likely to enjoy this benefit with investment-linked insurance policies. Thus, buying an ILP at a young age makes financial sense because compounding may raise your invstment over time.

For instance, a young individual who invests earlier will get greater returns than an older person who invests later.

Ensure your debt is not passed on to your loved ones

Student loan debt, mortgages, and any other significant debts can be prevented from being left to your loved ones by purchasing life insurance.

Misconceptions about life insurance

Life insurance is subject to many misconceptions and inaccurate information. We bust some of the most common life insurance misconceptions to alleviate your concerns and arm you with knowledge.

Life insurance is too expensive

The most flexible premium available is life insurance. It can be altered to meet your needs, such as progressively increasing premium paying capacity. It also depends on multiple factors, including age - your premium rate is lower if you are younger.

Typically, premiums can be paid monthly, quarterly, semiannually, or annually. You can even pay premiums with a one-time payment if you want to avoid dealing with recurring fees.

You won't regret getting life insurance if you do not own one. You might even find some solace in it knowing that your loved ones will be provided should an unexpected event happens to you.

Life insurance is only for older people

Life insurance is not only for senior citizens. Having insurance during your 20s and 30s can be beneficial because these are frequently years of significant change. You may be completing your education, starting a career, purchasing your first home, or starting a family.

You may build a foundation of financial security for the life you're building with insurance coverage. By obtaining coverage when you’re still young, you can then convert or renew it at a lesser cost.

Life insurance is only useful after you die

Life insurance is a risk management tool associated only with death for too long. Although it is true that the payout to your beneficiaries will only happen after your passing, it can also provide additional support when you're alive. For instance, investment-linked life insurance policies work to increase your wealth, and you can withdraw and use the interest at any time you wish.

Is life insurance worth it for young adults?

Life insurance is equally important for both younger and older adults. This is especially so if you’re young but have dependents counting on you. The payout can assist in covering funeral expenses, preventing debt from being passed on to loved ones and so much more. And as mentioned above, locking in lower premiums while you're still young and healthy is another advantage you’ll enjoy.

Therefore, the sooner you purchase life insurance, the better it is for you and your family. For more on whether life insurance is worth it for young adults, read ‘10 Reasons Why Millennials and Gen-Z in Malaysia Need Insurance Now.’

Can you get life insurance in your 20s?

Life insurance is available in your 20s, especially since you can sign up for an affordable premium cost. In fact, it would be wise to purchase it when you’re in your 20s.

What type of life insurance is best for young adults?

PRUFirst, is a comprehensive insurance plan that works well for young adults. This affordable plan offers a 5 in 1 coverage that will protect you until age 60. You will be able to protect your lifestyle with life coverage, medical coverage, accident coverage, critical illness coverage and total and permanent disability (TPD) coverage.

It's also customisable in that you can strengthen your plan by adding on either Prudential’s Total Multi Crisis Care and PRUMillion Med Booster, or both.

Conclusion

If you are in your 20s, wait no more and get your life insurance! The sooner, the better. Prudential's reliable coverage can help ease the financial burden and provide peace of mind to you and your loved ones. Maximise your life on your terms and get in touch with our Wealth Planner today.