How Much is Insurance for a 20-Year-Old?

How Much is Insurance for a 20-Year-Old?

When you’ve just reached your second decade, you’ve got a lot to look forward to. If you started college right after high school, you’re probably anticipating graduation. And we know a lot of 20-year-olds look forward to their next birthday when they’ll finally reach the legal drinking age in the U.S.

With so much ahead of you, insurance might not feel like something you want — or need — to think about. And it might not be. With the exception of car insurance, many 20-year-olds walk around entirely uninsured and it works for them.

But there’s something you should know: there’s a type of insurance that will be a whole lot cheaper if you buy it now. If you’re looking to save yourself some serious cash down the road, you might want to consider getting a life insurance policy while you’re young.

That, of course, begs the question: how much is insurance for a 20-year-old? You probably already know that car insurance is pretty pricey in your early 20s, and you might not think you have enough room in your budget to shell out for a life insurance policy.

But if life insurance in your 20s is something you’re open to considering, you’ve come to the right place. Here, we’ll look at some of the best life insurance for 20-year-old individuals, your policy options, and what you can expect to pay. But first, let’s talk about why you would buy a life insurance policy now.

Why you might want life insurance in your 20s

At age 20, insurance can feel like a headache. For starters, buying any policy might feel like it requires learning a whole new language. Plus, car insurance is notoriously expensive in your early 20s.

Can a 20-year-old get their own car insurance? Absolutely, but they’ll pay for it — literally. The average car insurance cost for a 20-year-old male falls at a steep $4,097, or over $340 a month, according to Bankrate. Bankrate also reports that females only fare a little better, paying an average of $3,491, or $290 a month, at age 20.

That’s because car insurance providers see young drivers as inexperienced (read: high-risk). Long story short, barring a lot of accidents and/or tickets, you’ll probably never pay more for your car insurance than you are right now.

But life insurance is a whole different story. Life insurance for a 20-year-old female is almost always significantly cheaper than it is for a woman in her 30s, 40s, and beyond, and the same goes for males. Why? Because while car insurance companies might see you as a risky choice, life insurance companies love you.

You’re young, You’re in the prime of your life. You’re probably pretty healthy. And that means you’ll have lots of years before you die, meaning your life insurance company can keep your policy in place (and make money) for a while. As a result, if you buy life insurance in your early 20s, you’ll be able to get it cheaper than at any other point in your life.

In fact, young, healthy individuals pay the least for life insurance. Notice that second adjective? The healthier you are, the less you’ll pay, too, so it’s worth evaluating your quality of life. If you’re making health-smart choices like eating a nutritious diet, exercising regularly, and getting plenty of sleep, you might be able to score lower life insurance rates. Pair that with your young age, and you’re set up for the cheapest life insurance possible.

How life insurance works for 20-year-olds

A good deal doesn’t necessarily equal a good reason to buy coverage. While you technically can get life insurance at 20, it might not be the right choice for everyone. To help you decide if you should consider life insurance, let’s take a brief look at how it works.

When you buy life insurance, you buy a policy that will pay out a certain amount of money at the time of your death (assuming the policy is still in effect). The payouts are usually pretty huge, ranging from somewhere around $250,000 to millions of dollars. These payouts are called death benefits because they go to benefit the people you name on your policy as your beneficiaries.

Let’s say you took out a big private student loan for college and your parents co-signed on the loan. You might not want them to be left with that debt if anything happens to you. With a life insurance policy (assuming you name them the beneficiary), they would get the death benefit and could use that money to pay off the loan. That’s just one example, though. Your death benefit could go to anyone you want. You just need to name them as your beneficiary.

You should also know that there are two main types of life insurance:

  • Term life insurance: These policies are much cheaper than the other type of life insurance. They’re called term policies because they expire after their term is up. You might get a term policy for 30 years, for example. At the end of the 30 years, your policy will expire, meaning you don’t get anything if you outlive the policy term. But term life policies give you decades of coverage for a pretty small amount of money.
  • Whole life insurance: Whole life insurance policies last your lifetime, but they cost more. As an added benefit, whole life insurance comes with a cash value component, which basically gives you a way to invest some of what you pay for your premiums (the amount you pay for the policy) over the years.

You can learn more about these two types of life insurance from the Insurance Information Institute (III).

Clearly, you’ve got options when it comes to life insurance. But is now the right time to buy a policy? A big piece of the puzzle is understanding how much it will cost.

How much is life insurance for a 20-year-old?

Life insurance costs pretty much the same amount through your 20s. You can get a good idea of what you’ll pay (on average) from this table from Finder.com. Pulling from those average rates, here’s a quick look at the average life insurance cost for a 20-year-old male alongside life insurance for a 20-year-old female, compared against some other, similarly aged individuals. All of these hypothetical people bought a 20-year term life insurance policy.

AgeGender$250,000 policy$500,000 policy$1,000,000 policy
18Male$16.74$26.90$41.83
18Female$13.78$20.46$32.71
19Male$16.58$26.57$40.95
19Female$13.78$20.46$32.71
20Male$16.28$26.24$39.57
20Female$13.48$20.31$29.77
21Male$16.12$25.92$38.99
21Female$13.49$20.33$29.77
22Male$15.79$25.56$38.99
22Woman$13.49$20.33$29.77
Source: Finder.com Average life insurance rates for 2021

Clearly, the average cost of life insurance for a 20-year-old isn’t too pricey, hovering somewhere in the $15 to $30 dollar range. But you might be wondering why the average cost of insurance for a 20-year-old male differs from the rates for females. Simple: life insurance companies know that women tend to live longer, as data from the World Health Organization (WHO) shows.

What is a good age to get life insurance?

You might have noticed that we’ve mostly talked about term life insurance policies. And since traditionally, term policies don’t extend beyond 30 or 40 years, you might be wondering what’s up. Why would you buy a policy that will almost definitely expire during your lifetime?

The answer is twofold. For starters, term policies are so much cheaper than whole policies that they’re usually a better fit for people in their 20s. By the time your policy expires, you’ll probably be in a much better position to either get a new term policy or get a whole life insurance policy.

The second part of the reason you might want term coverage now is that some insurance providers let you convert your term policy into a whole policy instead of letting it expire. By buying life insurance while you’re young and healthy, you might be able to score a whole policy for a much cheaper price.

That said, the right time to buy a life insurance policy depends on your unique goals and financial situation. As you can see from the table above, insurance might actually get cheaper as you get closer to your mid-20s.

Still, though, because life is unpredictable, you might not want to wait to buy coverage. If you have a significant amount of debt — or just want to make sure your loved ones get left with a nice benefit when you pass away — you might want to buy a policy now.

At the end of the day, most experts, including the ones at Investopedia, agree that buying life insurance when you’re younger is generally your best bet. While there’s no precise age when it’s wisest to get your coverage in place, it definitely makes sense to start thinking about life insurance in your 20s.

Beyond that, the right type of policy depends on your situation, too. If you can afford a whole policy, you can lock in the low rate you’ll get for buying at a young age now. But if you need to choose term coverage, you might be wondering if you should get a 15, 20, 30, or even 40 year term. That depends. If you know your student loans will be paid off in 20 years, for example, a 20 year policy might be enough.

Ultimately, a lot goes into finding the best life insurance for any 20-year-old. We can help. Here at Sproutt, we care about connecting people to the best life insurance based on their unique wants and needs. We also prioritize helping you find coverage that rewards you (i.e., costs less) because you lead a healthy lifestyle. So if you’re looking for the best life insurance for a 20-year-old, don’t hesitate to contact us.

Get an instant online quote for life insurance.