When you're young, life insurance often seems like something only workers approaching retirement need to worry about. In reality, people in their 20s and 30s typically need coverage more than senior individuals, who often have fewer responsibilities. The following guide outlines a few factors millennials should understand about the benefits of life insurance.

What Is Life Insurance?

Life insurance pays a cash benefit to the individuals of your choosing if you pass away while the policy is in effect. The beneficiary can use the money as they see fit. These funds are tax-free and can be used to cover your funeral expenses or set up a college fund for your children.

What Are the Different Types of Life Insurance Policies?

Term Life Plan

Term life insurance policies are the most popular option, thanks in part to their lower rates. These plans pay benefits if you pass away within a specified period, usually 10, 15, or 25 years. New parents often choose 25-year term policies to ensure their children have the resources they need to start their own lives if something unexpected should happen to them. At the end of the term, you may renew at higher rates or let the policy expire.

Whole Life Plan

Unlike term policies, whole life insurance remains in effect for as long as you pay the premiums. This does result in higher rates, but it makes this type of plan an ideal option if you wish to leave a legacy for your loved ones or a charitable organization.

Most whole life policies include a savings component, with a portion of your premiums going into an investment account. In time, you may be able to make withdrawals or borrow against these funds to purchase a home, finance a loved one’s education, or make other important purchases.

Why Do Young People Need Life Insurance?

Life insurance premium prices are age-banded, so people in their 20s or 30s often pay hundreds of dollars less per year than those only 10 years older. Even if you aren’t married or don't yet own a home, buying a policy while you're young can protect the life you build in the future while saving you thousands of dollars.

Purchasing a small life insurance policy also gives your loved ones the resources to pay your final expenses without going into debt. If a parent or another family member has cosigned on student loans or other obligations, your benefits can also cover these costs so creditors won’t hold your surviving relatives responsible for the payments.

Choosing a life insurance policy can be overwhelming, but the agents at Advantage Insurers take pride in making the process as simple as possible. As an independent agency, they compare options from a variety of industry-leading carriers to find the plan best suited to your needs. Visit their website to learn more about their team and the wide range of services they offer. Call (706) 754-1590 to reach their office in Demorest, GA.