Why you need life insurance in your 20s

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Let’s face it, life insurance isn’t a sexy topic, especially if you’re in your 20s. After all, life insurance is usually associated with death, and when you’re just starting out in life – with hopes and dreams and more-than-likely good health – who wants to dwell on the Grim Reaper? Life insurance is something that can wait until later, your 30s and 40s – or so the thinking goes – and the can gets kicked down the road.

But life insurance can offer far more than just payouts upon death. When you get past that and other misconceptions (“it’s too expensive”; “I don’t need it if I’m single”) and get past the often confusing jargon (“term”; “level premiums”; “riders”) one thing becomes clear: Getting life insurance while you’re still young can be a smart move, and it could be, well, life-changing. But when does it actually make sense and what should you be looking out for?

To take advantage when you’re young and healthy

The two main reasons to buy life insurance in your 20s: cost and coverage. Ironically, life insurance may be the last thing you need when you’re young and healthy – but that’s actually when it can be most beneficial to get coverage. Premiums are calculated based on age and health, so it’s simple: the younger and healthier you are, the cheaper your monthly payments will be, especially for “term” life insurance policies, which covers you for a set period of time – typically 10, 20 or 30 years – and is the type of policy younger people usually start out with.

Now, while the basic idea of life insurance is the same, keep in mind that specific products, how those products are designed and pricing models differ from region to region, country to country. In many countries – such as the UK, Germany and Japan – there are guaranteed fixed payments, known as “level premiums,” which you can lock in for decades. An example of a level premium in the UK would be a 20-year-old (male, non-smoker), who could pay as little as GBP 7 per month (for a policy of GBP 150,000) that remains fixed for 45 years.

Waiting until you’re older – when premiums increase in line with health risks – could mean you will pay much more for the same coverage. In these countries, starting early means you essentially get “free” coverage for those years, with the total amount paid over time being similar (or even less) than someone who starts later.

In comparison, some countries, including Australia, Brazil and Spain, “step premiums” are more common. This means the initial cost may still be lower, but your premiums increase each year as you get older. In these cases, the incentive to lock in lower premiums earlier is not as strong. But there is still a major benefit to securing coverage early: You’re protected before any health issues arise, which can help you avoid coverage exclusions and make sure you qualify for life insurance at all. As Alex Nakhapetian, Head of Customer Value Management at Zurich Insurance Group (Zurich) points out, “owning life insurance is a privilege,” he says. “You may be insurable today but not tomorrow. And you’re far more insurable when you’re young.”

To safeguard financial freedom

In the words of Rhys Dudding, Zurich’s Chief Claims Officer Life, “There’s more to life insurance than just death.” Life insurance can also help protect against the impacts of disability and critical illness while you’re alive, with many policies including features that support you if you’re unable to work.

While income protection is usually a separate insurance product, it can sometimes be added to your life insurance policy as an additional feature, or “rider,” providing regular payments to replace part of your lost income – often at a lower cost than buying two separate policies.

But there are also other “living benefits.” In some markets, policies come with additional support services, such as health advice or wellbeing resources, which can be utilized long before a claim is ever made. Other benefits can be added on to a term policy that could kick in if you face disability or critical illness, providing additional coverage for any financial gap. This could include, for example, a lump-sum payout to help maintain your standard of living and cover rent or mortgage payments, excess medical costs or even home modifications to ensure you’re able to focus on recovery rather than financial stress.

And this may be more relevant for younger adults than you realize. Health challenges such as metabolic disorders (including diabetes and heart disease) are increasingly affecting younger generations. Mental health challenges are also becoming part of early adulthood. According to upcoming Zurich research, if current trends continue, around one in three working age adults in Australia and the UK will be living with a mental health condition by 2030 – many of which will be first diagnosed in their teens and 20s.

A diagnosis or accident could mean months or even years out of work, jeopardizing your income and independence. “With a critical illness policy, you hope you will never have to use it, but if you do, there’s that safety net,” Dudding says.

To protect those you care about

Your 20s can be when big milestones start to happen: the start of your career, buying a first home, getting married or even welcoming a child. These life events bring joy, excitement and significant financial responsibility. But many younger adults find themselves learning about money management through trial and error, and unexpected events can lead to significant debt – sometimes even passing on financial burdens to family members.

Life insurance is a tool for breaking this cycle, ensuring that debts like credit cards, student loans or mortgages don’t become intergenerational problems. In markets like the U.S., where higher education is prohibitively expensive and student loans are often co-signed by parents, life insurance can protect loved ones from inheriting debt. If you have a mortgage, life insurance can cover the outstanding balance, protecting your family’s home and stability – and in many countries, lenders may require life insurance as part of the mortgage process.

Getting coverage earlier can make the approval process easier, as your risk profile may be more favorable, and in some countries, you can update or change your coverage through significant life changes, without the need for additional or new underwriting. But the value of life insurance isn’t just in the payout – it’s in the options and security it gives families during their hardest moments. You’re not just protecting against the unlikely; you’re securing the assets and opportunities you’re working hard to build.

So whether you’re planning major milestones, safeguarding your independence or simply taking a smart step toward financial wellbeing, life insurance can be an investment in your future. “I understand that at a younger age you might think, ‘I’ve hardly got any money at all,’ and if you do, you’d rather go out and spend it on something fun or whatever it might be,” says Chris Bagnall, Global Head of Individual Life Underwriting at Zurich. “But you don’t wait until it’s too late. Why delay? Life insurance isn’t about expecting the worst. It’s about being ready – just in case.”

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