The college years are an exciting time of exploration and self-discovery, but they’re also one of the most financially difficult times in your life. Many new students are saddled with large amounts of student loan debt from their schooling, as well as higher costs of living due to more expensive rent and food prices than they’re used to at home. Luckily, life insurance can help students pay off these expenses in the event of untimely death, allowing them to focus on their studies without having to stress about money at the same time.
1) Protect Your Family
If your life is cut short, you want to be sure that your family will be well taken care of. Life insurance is designed to do just that—make sure your loved ones aren’t burdened with debt or left in dire financial straits after your death. As a student, it’s important to note that one (or two) policies won’t take care of all future needs, but they can make an important impact on what your family might do when you pass. Here are some things to consider when deciding how much life insurance you should get 1. How old are you? Generally speaking, younger people need less coverage than older people because they have more time to build up assets and plan for their families’ futures. But if your children are young and still relying on you financially, then buying more coverage could help protect them in case something happens to you before they become self-sufficient adults. Plus, by getting a policy early enough, you could potentially qualify for lower premiums than someone who buys later in life due to age rating factors such as health conditions and smoking habits. Keep in mind that if any dependents rely on your income, then buying enough coverage could also provide tax benefits.
2) Buy Peace of Mind
It’s easy to put off paying premiums because you don’t have any life insurance, but waiting will only make matters worse. For example, if you pass away suddenly and unexpectedly, your family may struggle financially for years—even decades—if your survivors are forced to liquidate assets or take out loans against your mortgage. And that’s if they can even collect on your policy at all! You might think a $500,000 term life insurance policy is out of reach for someone just starting their career; however, many companies offer policies with low cost-of-living adjustments (COLAs) and reduced premiums for young adults who use long payback periods. Don’t let money stand between you and peace of mind. Start investing now!
3) A Good Return on Investment
The earlier you start investing, your money can grow with compounding interest. This means that if you invest $1,000 today, over time, it will be worth much more than $1,000. Compounding allows for exponential growth on your investment capital. The sooner you start investing and saving for your future, the more valuable those investments will be later on down the road. As an example, let’s say you invest $10,000 at age 20. If your investments earn 7% per year, by age 65 they will have grown to over $100,000. However, if you had waited until age 30 to make that same investment ($10k), by age 65 they would only be worth about $25k – because of missed opportunities to compound your earnings! By starting early and making smart choices about where to put your money (like life insurance), students can take advantage of these benefits and set themselves up for financial success later in life.
4) A Great Way to Save for Retirement
According to Harvard University, The younger you are when you start saving for retirement, the more time your investments have to grow before you need them. Furthermore, if those investments earn compound interest over their lifetime — and there’s no reason they shouldn’t! — then you’ll be rewarded with thousands more dollars than if you’d been late to jump on board. Finally, since life insurance premiums aren’t taxed (unlike retirement account earnings), it’s possible to put away even more cash by purchasing a policy early. So start building your nest egg now! Your future self will thank you later.
Money isn’t just meant to provide an income; rather, it can also serve as collateral that lenders trust due to its ability to pay out should a borrower default on their loans. In other words, money is an asset that has resale value and can function in place of traditional assets like real estate or stocks. Because life insurance acts similarly to money – and has resale value – some people use it as collateral for loans. For example, if you had enough money saved up for 15 years worth of life insurance premiums but not enough for 20 years’ worth, an insurer would likely accept your savings offer at 80 percent face value because they’d still receive eighty percent of what they were owed at settlement.