3 people who got 1 million of life insurance in their 20s and 30s explain why they did it

Below are the best information about 1 million life insurance public topics compiled and compiled by our team

  • If you plan on purchasing a life insurance policy, there is no benefit to waiting. Getting the best rate means purchasing a plan when you are young and healthy.
  • Contrary to the popular belief that millennials are bad money managers, a study found that more millenial households own life insurance than any other age group.
  • Three Insider contributors who bought $1 million life insurance policies when they were in their 20s and 30s did so to get the best premiums and protect their future families.
  • One of the main reasons younger people typically overlook life insurance is because they overestimate the cost associated with a plan.
  • Policygenius can help you compare life insurance policies to find the right coverage for you, at the right price »

Nobody wants to think about the end of their life when they’re just beginning it. Being young means looking to the future and thinking about the endless possibilities for growth and expansion.

But, if you plan on ever purchasing a life insurance policy, there is no benefit in waiting — you’ll get the best rate when you are young and healthy.

When it comes to money management, millennials (and their avocado toast) often get a bad rap for focusing more on their needs today than their financial futures. But according to data from the research firm LIMRA, in 2016, 70% of millennial households had some sort of life insurance policy. That shows a forward outlook.

Why buy $1 million of life insurance when you’re young?

Insider’s contributors have written often about life insurance — why they bought it, when they bought, and how much they bought. And many were young — in their 20s and 30s — when they purchased policies worth $1 million or more.

Eric Rosenberg calculated what his family would need over a 10-year period

Eric Rosenberg purchased his coverage six years ago, when he was 29 years old. He had a steady job with an annual salary. He was newly married and did not have kids but wanted his future family to be able to sustain their lifestyle in the event he died suddenly.

Rosenberg had additional life insurance coverage through his employer but knew that someday he might become self-employed.

He decided on a $1 million policy that could cover his family for 10 years at an annual income of $100,000 in the event of his death. Because he was young, his monthly costs were lower than what they would have been had he made the decision to buy a policy a decade or more later.

“If I bought life insurance again today, I would probably go with $2 million in coverage, just to be safe.” Rosenberg wrote in an essay for Insider.

It turns out purchasing a policy young was the right choice. Since purchasing his policy, Rosenberg’s life changed in ways that would make him a higher risk to insurance companies, which means higher monthly premiums. Not only is he older, but he has taken a liking to aviation and got his pilot’s license. High-risk activities such as certain sports or hobbies increase your rates. Rosenberg’s father was also diagnosed with prostate cancer. A known family history of health conditions such as cancer and diabetes also increases monthly premiums.

“We have three kids today and I can rest easy knowing they’re protected by a sizable life insurance policy,” Rosenberg said in an email to Insider.

Katie Oelker wanted her policy locked down while she was young and healthy

Katie Oelker realized the importance of life insurance after her father developed terminal liver cancer. She wanted to lock down her own policy while she was young and in good health.

Oelker and her fiancé each decided to get a 30-year term life insurance policy for $1 million when they purchased their first home. In the event one of them died, the other would be able to continue living in their home without worrying about covering costs.

“I know a lot of people want to wait until they have children, but if you and your partner are in it for the long run there’s no better time to purchase than when you are young and healthy,” Oelker wrote in an essay for Insider.

Dan Miller knew a 401(k) wouldn’t protect his family

When Dan Miller and his wife first started their family, they were living on a tight budget. With only a little cash to spare, he needed to make a decision between monthly contributions to a 401(k) or a life insurance policy.

At the time, his household was dependent on his income. If he were to die, his wife and children would have been left in financial distress and his 401(k) would not have been able to save them. He went ahead and purchased a term life insurance policy. Once their household income grew, the Miller family began to allocate money towards retirement and investment funds.

Life insurance is more affordable thank you think

Even if you are on a tight budget, life insurance doesn’t have to be expensive. One of the main reasons younger generations overlook it is because they overestimate the cost associated with a plan. According to the Insurance Information Institute, 44% of millennials thought monthly premiums would be five times the actual amount.

There are two main types of life insurance policies, term and whole life. Term policies have a set expiry date, usually between 20 and 30 years. A whole policy offers lifetime coverage and could offer a cash value option. The cost between the types varies substantially. The average monthly cost for term life insurance can be as low as $16 if you are young and healthy, while whole life insurance can be about $85 or more for the same healthy, young person. However, if you wait until your 50s, those premiums can increase by 200%.

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