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Why take out life and health insurance in your 20s?

June 7, 2021

When we’re in our 20s, we have our whole life ahead of us and rarely think something bad could happen. But life can turn upside down in an instant, no matter how old we are. We might want to sail through life without adversity, but no one can predict the future. And we also have to remember that what happens to us can also affect those we love. How do you know if you need insurance? Here are some things to consider.

Take stock of your situation and needs

If you’re young, in good health and don’t have kids, it’s only natural to wonder if you really need individual insurance. Maybe you’re still covered under your parents’ insurance or the one offered by your college or university. Whether you’re single or in a relationship, studying or working, you definitely have financial responsibilities, like:

  • Credit card payments
  • Rent
  • Utilities (like phone, Internet, cable and hydro)
  • Car payment
  • Student loans

If you became ill or had an accident and were off work for months, would your parents or partner have to cover your bills? If you were injured on the job, you could be covered, but you might not be if you suffered a sports injury (biking, downhill skiing, etc.) and it could end up costing you a lot.

Maybe you have an emergency fund to cover unexpected expenses, or some money set aside for something special you want to do. If you had insurance, you wouldn’t have to dip into your savings. That’s why it’s important to thoroughly evaluate your needs and choose the right coverage. Here are some major life events that could change your financial commitments:

  • Moving into an apartment and taking on new financial responsibilities
  • Graduating from college or university and starting to make student loan payments
  • Being taken off your parents’ or postsecondary institution’s insurance
  • Entering the workforce or starting a new job

What’s the purpose of individual coverage?

Health and disability insurance offer you many benefits. If you weren’t able to work indefinitely due to injury or depression, you’d still be able to keep up with your financial commitments, like paying your debt and monthly expenses (rent and bills, etc.) with no interruption. A leave of absence is already very stressful; you don’t need extra financial stress.

Being able to keep up with your financial obligations means your credit score won’t be affected. It can be easy to forget, but late payments can impact your credit history. Protecting your credit allows you to keep your dreams and goals on track, no matter what they are. As a twenty-something, life is just beginning!

In the event of death (which none of us want to think about, but is inevitable sooner or later), life insurance relieves your loved ones from the burden of having to pay off your loans and other debts. You might also decide to leave them a bit of money.

Why do I need life insurance when I have my whole life ahead of me?

Did you know the younger and healthier you are, the more affordable individual life insurance coverage is? Since you represent a lower risk, you’ll pay less and, depending on the insurer’s conditions, you might not need a medical exam (in most cases, up to age 25). You can choose term coverage for a fixed term (normally 10 or 20 years). Take the test to find out how much insurance might cost—there are just 3 questions to answer!

What should I know before choosing coverage?

When you’re ready to choose the best coverage for you, be sure to find out about any coverage you’re already eligible for, and the scope. For example, if you’re covered under your parents’ group insurance, it usually ends when you leave home or after a certain age. The same applies if you took out insurance offered by the college or university you attended. If you’re still covered for a few years, find out if it’s enough for your needs, because our lives and responsibilities are constantly changing.

Are you entering the workforce or changing jobs? You might be able to get insurance from your employer or a professional association you’re planning to join. If so, take a close look at what’s included and what’s optional, as it might not be enough for your needs. You might need new glasses, but do you know if they’re covered? If you love to travel, now’s the time to check if your group insurance also offers travel coverage that meets your needs. If you see that it doesn’t offer enough coverage, consider additional life, health and disability insurance.

No matter what your situation, feel free to talk to a financial security advisor. We’re always there to help you ask the right questions as you make this important decision. Everyone needs insurance no matter how old they are—you just need to consider your needs and situation.