When you’re under 24, life insurance probably isn’t the first thing on your mind. You’re thinking about school, work, travel, relationships, or maybe just figuring out how to pay off those student loans. Life insurance? That sounds like something for your parents.
But here’s the truth: young adult life insurance is one of the smartest and most affordable financial decisions you can make. Not only does it protect your loved ones, but it can also give you a massive head start on building wealth.
Let’s break down why.
Why Do Young Adults Need Life Insurance?
The biggest misconception is that life insurance is only for people with kids or mortgages. But even if you’re in your early 20s (or younger), there are solid reasons to get covered:
- It’s dirt cheap at your age. A healthy 20-year-old non-smoker can lock in a $250,000 term policy for around $12–$15 per month. That’s less than what most people spend on Netflix or Starbucks.
- Student loan co-signers. If your parents co-signed your private student loans, they’re on the hook if something happens to you. A small life insurance policy makes sure they’re not left holding that burden.
- Building permanent wealth early. If you choose permanent life insurance like an Indexed Universal Life (IUL), starting young lets your cash value grow tax-free for decades.
- Protecting young families. If you’re married, have kids, or plan to soon, life insurance is non-negotiable.
Bottom line? It’s not about how old you are — it’s about who depends on you, and how cheaply you can prepare for the future right now.
Time Is Your Greatest Asset
When you’re young, you have something no one can buy: time.
That means two things:
- Compounding works in your favor. Saving even $50 a month in an IUL or other wealth-building tool can snowball into hundreds of thousands of dollars over decades.
- Your health is usually at its peak. That means you’ll qualify for the lowest possible life insurance rates. Waiting until your 30s or 40s? You’ll pay double or triple for the same coverage.
Think of life insurance like locking in today’s prices for tomorrow’s peace of mind.
How Much Does Life Insurance Cost for Young Adults?
Here are some real averages for healthy, non-smoking U.S. young adults in 2025:
- Age 20, Male, Term Life ($250k, 20-year policy): ~$14/month
- Age 20, Female, Term Life ($250k, 20-year policy): ~$11/month
- Age 24, Male, Term Life ($250k, 20-year policy): ~$17/month
- Age 24, Female, Term Life ($250k, 20-year policy): ~$14/month
Permanent life insurance costs more, but remember — part of your premium builds cash value you can borrow against tax-free later. If you’re 22 and buy an IUL, by retirement you could have six figures waiting for you, all while your death benefit protects your family.
Isn’t Dave Ramsey Against This?
I like what Dave Ramsey says about getting out of debt. Living within your means is critical. But here’s where I take a different path:
Dave’s famous line is “buy term and invest the difference.” The problem? Most people don’t actually invest the difference. They spend it. And even if they do, that money is usually in taxable accounts or tied to market risk.
When you’re under 24, you can use permanent life insurance (like an IUL) to:
- Build tax-free growth without stock market downside risk.
- Lock in ultra-low rates for life.
- Create living benefits you can tap into for college, buying a home, or retirement.
So yes, avoid debt. But don’t settle for beans and rice just to feel safe — there’s a smarter way.
Real-Life Examples of Why Young Adults Need Life Insurance
- Maria, age 22: Her parents co-signed $40,000 in student loans. A $100,000 life policy costing $9/month would erase that debt if the worst happened.
- James, age 19: Bought a small permanent policy with $100/month premiums. By 65, he could have over $200,000 in tax-free cash value — and his family is protected the entire time.
- Kayla, age 24: Recently married and pregnant. A $250,000 term policy costs her less than $15/month. If something happens, her spouse and child are financially secure.
These aren’t “what if” horror stories. They’re real ways young adults have used life insurance as a safety net and a springboard.
FAQs About Young Adult Life Insurance
Is life insurance worth it at 20?
Absolutely. It’s the cheapest it will ever be. Lock in a policy now, and you’ll save thousands over your lifetime.
Should I get term or permanent life insurance?
It depends on your goals. Term is cheapest and great for basic protection. Permanent (like an IUL) is more expensive but builds tax-free cash value you can use while you’re alive. Many young adults start with both.
What if I don’t have kids or debt?
Even if no one depends on you, a small policy can cover funeral costs and medical bills — sparing your family the financial stress. Plus, buying young means your rates are locked in for life.
How much coverage do young adults usually need?
Most financial advisors suggest at least 10x your annual income. But if you’re in school or just starting out, even $100k–$250k is a smart starting point.
The Hidden Advantage: Using Life Insurance as a Wealth Tool
When most people hear “life insurance,” they think about death. But young adults who choose an Indexed Universal Life (IUL) policy quickly realize it’s really about living.
- College Funding: Parents can use the cash value to help with tuition without hurting financial aid.
- Home Purchase: You can borrow tax-free against your cash value for a down payment.
- Retirement Income: Decades later, that same policy can provide a tax-free stream of income when you need it most.
Starting under 24 means you give your money the longest possible runway to grow — without worrying about stock market crashes wiping out your savings.
Final Thoughts + Next Step
If you’re under 24, life insurance isn’t just protection — it’s an opportunity. It’s about locking in the lowest possible rates, giving your future self a head start, and making sure your loved ones never carry your financial burden.
You don’t have to figure it out alone. Text your questions to an advisor today. There’s no pressure, no sales pitch — just real answers to help you make the smartest decision for your future.
Because the truth is simple: the best time to buy life insurance was yesterday. The next best time is today.