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This is where the saying ‘play it smart’ should ring appropriate; no matter what your age, you can effectively plan ahead to where Suncorp life insurance cover is affordable now and saves you money later.
It doesn’t matter if you’ve started a family yet, or are planning to several years down the road. Just with anything in life, it’s all about setting yourself up for future success, today.
Educating yourself and taking the time to compare life insurance policies is key, and a good place to start is with knowing the difference between whole life insurance coverage and term life insurance coverage.
Knowing the Difference
While whole life insurance coverage provides you with a life-long policy that comes with added investment incentives—you can accumulate tax-free cash—it is, in fact, not the option that most personal-finance specialists would recommend unless you have extenuating circumstances (i.e. a handicapped child who will depend on you throughout its life). This is due to the fees, commissions, and expensive surrender charges that are built-in to the policy.
Under most circumstances, term life insurance is the preferred option. You’re covered for a specific amount of years and only receive benefits upon death, but it’s a fixed-premium policy that you can customize to pay monthly, quarterly, or annually.
For most, regardless of age, this is the best option according to Tony Steur, author of Questions and Answers on Life Insurance: The Life Insurance Toolbox, who says, “Term coverage is the appropriate coverage for most individuals, as their needs are for a certain term of years, while their other assets accumulate, such as retirement savings.”
Things to Consider
As a young adult looking to plan for the future of both themselves and their current, or future families, there are a few things that should be taken into consideration to ensure you’re getting just the coverage you need affordably.
Q: What kind of insurance is appropriate for me?
A: For a young adult in their 20s, the best life insurance coverage is the term option. It’s the most affordable for someone of your age and allows you to reevaluate your coverage after a certain term of years.
Q: How affordable is life insurance for someone my age?
A: Very; more affordable than it will be at any other point in your life. For example, a 20-year-old can usually purchase a $500,000 30-Year-Term Life Policy for an annual premium of $350 to $400. Which is significantly more coverage than you probably even need at this point.
Q: How much life insurance do I need at this point?
A: This is a question that every person, regardless of their age, has to ask. To calculate your desired coverage at any point in life, you want to consider your debt, financial obligations, dependents, etc. If it’s just you, and you’re free of student loan debt, then you can opt for coverage 4 to 5 times your income. However, if you have significant student loan debt, you’ll want to opt for multiples of 6 to 7. If you’re starting a family, or believe it’s possible that you will in the next few years, it’s good to go ahead and look at multiples of 8 to 10—especially if you have debt.