Taking your first steps into the adult world can be a little overwhelming. From finding ways to pay down your college loans to decorating your apartment, finding the right life insurance policy may be the furthest thought in your mind. However, investing in a life insurance policy when you are young is one of the best financial decisions that you can make.
While there are many different types of life insurance to choose from as a young adult, the two most common are term life and whole life insurance. Each type of policy comes with its own advantages that will work best for your situation. Working with your insurance agent is one of the best ways to make sure that you choose the right policy for your needs.
A whole life insurance policy will provide coverage for your entire life, no matter if you pass away this month or live to be 100 years old. Whole life insurance policies tend to have higher premiums than other life insurance options, but the premiums also cover the cost of the savings portion of the policy. The savings account that is part of a whole life policy can be borrowed against to cover costs while you are alive.
With a term life policy, you are only protected for a specific amount of time, typically 10, 20, or 30 years. If you pass away during the time that your policy is active, your beneficiary will receive the death benefit, or payout. However, if you outlive your policy, there will be no death benefit. Term life insurance policies have some of the lowest premiums of all the life insurance options, and can be transformed into a whole life policy if you decide that you want additional coverage.