When it comes to financial planning, each individual is unique in their needs given differing factors – such as age, income and savings level, household size and make-up, etc. Life insurance – a crucial element in financial and household planning – often gets overlooked as an important offering. For many, life insurance only comes to mind in light of a major event, such as an illness or accident in the family.

In recent months, the Covid-19 pandemic has contributed to a shift in attitudes – turning more people towards an interest in life and health insurance. In the U.S. for instance, applications for life insurance policies by younger people (aged 45 and under) grew 4% in 2020 – the largest year-on-year annual growth rate since 2001, as noted by the Wall Street Journal in February.

Life insurance is a product that provides pay-outs after death to one’s selected beneficiaries – an essential form of family protection, income protection and even debt repayment.

Policies can be straightforward and provide a ‘death benefit’ to beneficiaries, or policies can also be used for other types of pay-outs. It can be used for debt repayment and to replace lost income; to provide inheritance and/or education costs for beneficiaries; pay taxes (such as death and estate); and cover various expenses (such as funeral and burial costs).

Why Life Insurance, and Why Now?

Admittedly, such policies may not be at the forefront of young peoples’ minds – but there is no better time to think about and to obtain life insurance than when one is young.

The best time to purchase life insurance is as soon as possible. A younger age corresponds with better pricing for life insurance policies, due to the likelihood that young people probably don’t have serious medical, life-threatening conditions. Coverage is also easier to obtain at a younger age, as unexpected health conditions later in life makes life insurance more expensive and more difficult to obtain.

Life insurance is suitable for young people (those under 45) who currently have debt – mortgages, credit card debt, student loan; in addition to those who have or expect to have in the future, household members to take care of. In a difficult economic environment, life insurance can also supplement, or replace, workplace insurance policies.

When looking at coverage, there are two types of policies to consider. Term life insurance is popular due to its affordability and provides specific coverage for a pre-determined time limit. Whole life insurance provides coverage for as long as you pay the premium; it pays ‘death benefits’ and also accumulates cash value, but can be significantly more expensive.

Taking Action

The insurance marketplace in 2021 has become more convenient, digitally accessible and customized to individual policyholders. If you’re thinking of purchasing life insurance, there are easy steps to take – even from home – to proceed.

Prior to purchasing a life insurance policy, you can decide whether or not to undertake a medical exam. A policy can be bought quickly, with no medical exam or doctor’s appointment – particularly for healthy, young people. However, a rating of good health from a certified check-up could also mean a preferred health rating – and a lower rate for your policy.

Many insurance companies also offer ‘online calculators’ which provide a rough cost estimate of your life insurance policy, given your age and other factors.

And as always, make sure to check the fine print, find out which policies work best for you – and chat with a knowledgeable adviser when needed.