Saving tips for young people: Insurance

Life insurance is often overlooked by young adults in their 20s due to the perception of added expenses. However, experts emphasize the importance of securing life insurance at a young age to protect loved ones in case of unexpected events.

Andrea Thompson, a certified financial planner at Modern Cents, highlights the temporary high insurance need for young Canadians who are accumulating debts like student loans and have low income in the early stages of their career. Purchasing life insurance can prevent families and co-signers from bearing the burden of this debt if the policyholder passes away.

According to Jeffrey Talor, director of sales at Canwise Life Insurance Services, life insurance serves as a means to safeguard family, assets, and provide financial support to loved ones. Buying life insurance in your 20s offers several benefits, including locking in lower premiums for the future. As age increases, so do premiums, making it more cost-effective to purchase insurance at a younger age.

Talor explains that life insurance premiums are calculated based on age and other factors, making it easier and cheaper for individuals in their 20s to buy coverage. Despite the misconceptions about the costliness of life insurance, Talor reassures that term insurance, covering a specific period, can be as affordable as one to two dollars per day.

While permanent life insurance may have higher premiums, it offers lifelong coverage and potential cash value accumulation. This cash value can be used as collateral for loans or provide creditor protection in case of bankruptcy. Talor advises individuals to assess their budget and determine the coverage amount they are comfortable with, emphasizing the simplicity of acquiring life insurance with the right broker.

Thompson emphasizes the importance of conducting an insurance needs analysis to determine the appropriate coverage based on life stage and risks. Although most people have some coverage through their employment benefits, it may not be sufficient. Talor suggests purchasing insurance in stages as life circumstances evolve, allowing individuals to adjust coverage based on changing needs.

In conclusion, the decision to buy life insurance should be based on individual circumstances and financial planning. Understanding the benefits of life insurance and working with a knowledgeable broker can streamline the process and ensure adequate coverage. As life progresses with milestones like marriage, homeownership, or starting a business, revisiting insurance needs is crucial to protect loved ones and assets.

This rewritten article seamlessly integrates the original content while providing valuable insights on the importance of buying life insurance in one’s 20s.