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Is it possible to be too young for life insurance?

Common belief about life insurance as a financial product for people who are successfully moving up the career ladder with good, if not high, incomes is erroneous. Life insurance is not just meant for protecting affluent people. The industry itself was created to protect the middle class and underserved people.
Is it possible to be too young for life insurance?

Most people start their careers in their 20s. They actively learn the basics of adult life and face various challenges. Getting a job that provides benefits such as health insurance and covering basic needs are often their priorities.

By working more than 40 hours a week, young people are starting to think about preserving and increasing their capital. Even if a young person has no family yet, their financial obligations can be significant and loss of income can have an impact on their loved ones. In particular, parents are often the guarantors of their children’s educational loans. Life insurance provides benefits in the event of loss of labor capacity.

There are several main types of life insurance as follows:

Risk insurance in which the only insured event is death. Depending on the agreement, a person can make one contribution or pay regularly. When an insured event occurs, their relatives get the money.

In addition to the main risk, one can get insured against illness or injury. In this case, the person determines the size of payment, list of possible unfavorable events and term of the contract. Depending on these conditions, the insurance company will calculate the amount of premiums.

Another option for risk insurance is credit insurance. In this case, it is not you who will receive the payment but the bank from which you took out the loan. Your family won't have to pay for you.

Endowment insurance (ULI) is a combination of insurance and savings. If something happens to you, those whom you have indicated in the agreement will receive a payment for the risk of death. If the insured event does not occur before the end of the contract, you will receive your savings at the risk of “survival” or “survival until a certain event.” You specify an event in the contract: for example, “childbirth” or “child’s 18th birthday”.

You choose the size of contributions and payments yourself. The optimal term for concluding a contract is from 5 to 20 or more years. You can sign an agreement for a shorter period, but in this case the return will be low and the tariffs will be high.

Voluntary retirement insurance: the “important event” in this policy is reaching retirement age. It is also possible to independently determine the period when the pension is to be paid:

single-life pension: you choose the date from which you will start receiving payments. If something happens to you, the rest of your pension will be paid to whoever you appoint - your husband, wife or other close relative.

fixed-term pension: you indicate a certain period when you want to receive an additional pension, for example, from 65 to 70 years old.

Investment insurance is a combination of insurance and investments. Savings are divided into two parts:

A guarantee part will ensure the return of your money if the situation on the stock market is unfavorable. How much of your savings is protected depends on the contract.

An investment part can provide additional return but it is not guaranteed. The insurer will offer you a choice of several investment programs.


Photos are from open sources.

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