For the two-thirds of adults that do own life insurance, their reasons are clear. Protecting their families against potential financial devastation due to the loss of a breadwinner is far and away the primary reason they buy life insurance. While this is their stated financial rationale, most people draw from a more deep rooted purpose linked to their devotion to their loved ones and their sense of responsibility to ensure that their survivors be able to live in the manner to which they are accustomed. For them, life insurance is an emotional purchase that provides all concerned with peace of mind.
That still leaves millions of Americans who don’t own life insurance, or who have inadequate coverage to provide for the financial security of their families. While their reasons may be clear to them, their logic may not hold up to realities that most people face even if they are young, healthy and without family responsibilities. The fact is that the cost of life insurance has dropped so much in the last decade that a $500,000 policy can be purchased for less than the cost of twice-weekly Starbucks coffee for a healthy 25 year old. While that may not be incentive enough for young adults to run out and purchase life insurance, there are plenty of other reasons why they should.
Health is a Fickle Thing
The cost of waiting to buy life insurance increases with age, but it can accelerate significantly when health issues become a factor. For some, the biggest cost is the inability to even obtain life insurance should their health become a serious issue. For a young, healthy adult, the best possible time to buy life insurance is the present, when it is the cheapest, and while they can still get it.
Employer Life Insurance is only Temporary
Job security is not what it once was, and any employer-based life insurance coverage is temporary for the 50 to 60% of young adults who will be changing jobs or their employment status over the next twelve months. And, when it happens, their life insurance coverage will not be going with them. For those who land with another employer, there is a chance that their benefits package won’t include life insurance.
Do You have a Debt Wish?
The average adult has over $10,000 in debt obligations. For many young adults, that doesn’t include student loan obligations, nor does it include a mortgage. The same sense of responsibility that makes people pay their obligations when they are alive should provide the same motivation to ensure that they can be paid after they die.
You’re Going to Buy it Anyway
Eventually a significant portion of the one-third of adults that don’t own life insurance will become part of the two-thirds who do, and they will buy it for the same reasons - for love, for duty to family, for all of the practical purposes. The problem many adults encounter is that, when they really do need to own life insurance, they may have trouble getting it. If there is any family history of heart disease, hypertension, high cholesterol, cancer, or other genetic propensity for disease, it will catch up to many adults at some point.