I'm 23 and single, should I buy life insurance?
Answers | 15
If not, you probably have no need. You do need to begin to save for your future and doing so inside a life insurance policy that you probably do not need is not wise. Invest without the life insurance.
My favorite class in college was mathematics of finance. It helped me understand the time value of money, and how elegant life policies can be. Still, there's a cost to them, and I'm more in Dan's camp: amass money for the future (real estate, stocks, etc.), and when the true need for protection comes (married and in debt), get your coverage then. If budgeting and investing are a challenge for you, Michael may be correct that you should get a permanent policy. Me? I do not have a policy that builds value. It has a level premium for 20 years that is *low*, and I have that on auto-pay that I don't think about. The rest of my money flows into tax-deductible accounts (non-Roth because unless my tax bracket changes at retirement, there's no mathematical advantage to the ROTH-style accounts, no matter what you might hear)!
Getting a Term policy at your age is easily affordable, and this would lock in the coverage for when you need it.
However, getting a competitive Permanent policy will over time provide you a greater gain than buying Term and investing the difference when comparing vehicles of similar risk/safety. This point has been supported by government regulations limiting how much could be paid into the policies to maintain the advantages that Whole Life and Universal Life have over other investment strategies.
In my professional opinion, the earlier one purchases life insurance, the better. Depending on the type(s) you purchase, you are guarding against creating a financial burden on your loved ones down the road, but perhaps more importantly, you are protecting yourself against being uninsurable (at least at a reasonable premium) down the road should your health deteriorate.
Your need for insurance will probably change as you age and as your life circumstances change. At some point you may need a combination of term, universal and whole life. If you are smart in your choice of policy and maximum-fund it, you may also generate quite the tax-free income stream for your retirement years, all while diversifying your portfolio.
Seek the counsel of a qualified independent broker, research the companies he/she recommends, and be sure you know all the pros and cons regarding each policy type.
Best of luck to you!
I realized if I were to die at a young age, somebody would have to take care of my crap I left behind and that would be my mom. So, I just died which would have crushed my mom. Now, since there is NO MONEY to take care of my funeral or her loss of time at work to actually grieve for me, I would not only be dead, but hanging debt on my mom. Just couldn't do that. I didn't need industry jargon or formulas to figure that out. Love my mom, know she would be crushed if I died, didn't want my death to be a financial burden for her.
Let's hope your life is meaningful to somebody else and you love them enough not to double whammy them with your death and debt.