Summary5 min read

Optimal Finance Daily – Episode 3285: "Life Insurance for Young Adults"

Host: Diania Merriam
Featured Content: Jeff Rose of GoodFinancialCents.com
Release Date: September 16, 2025

Episode Overview

In this episode, host Diania Merriam reads and expands upon Jeff Rose’s article, “Life Insurance for Young Adults,” exploring whether young adults should consider life insurance, the practical reasons behind owning a policy, and strategies for locking in affordable premiums. The discussion centers around the nuanced responsibilities facing young adults and offers practical guidance for making a potentially overlooked financial decision.

Key Discussion Points & Insights

1. Should Young Adults Buy Life Insurance?

It Depends on Your Situation ([01:00]):
- Many young adults overlook life insurance, thinking it's unnecessary if they're single or childless.
- Jeff Rose recalls his own early career, where life insurance was the last thing on his mind:
  
  “One of the last things on my mind was buying life insurance. I could almost guarantee that for all young adults, buying life insurance is the last thing on our minds.”
Consider Family Responsibilities:
- Even without dependents, funeral and financial burdens may fall on parents or family if something happens.
- Small, inexpensive term policies can protect family from funeral costs:
  
  “Getting a cheap term policy would have cost me less than $10 a month and my parents would have been unscathed financially if something happened to me.” ([01:44])

2. Assessing Financial Impact After Death ([02:10]):

Who Would Suffer Financially?
- Rose urges single young adults to talk to parents about the financial impact of a tragic event, emphasizing responsibility even if it seems remote.
Student Loan & Education Debt:
- Parents might have used retirement savings to fund education.
  
  “If she would have bought cheap life insurance, her parents would have replenished all the money they had invested into her college education.” ([03:14])
Future Debts:
- As young adults look toward homeownership, potential mortgages could become a family responsibility if the unthinkable happens.

3. When Not to Buy Life Insurance ([04:01]):

Not Necessary For:
- Debt-free, independent, unmarried, and childless young adults.
- Jeff Rose:
  
  “If you're debt free, your parents haven't handed you the silver spoon, and you're not married, then buying life insurance isn't necessary. At least not yet.” ([04:04])
Employer Life Insurance Caveats:
- Avoid relying solely on employer-provided policies unless you have a preexisting condition; individual policies offer portability and comparable rates.

4. Affordability of Life Insurance ([04:39]):

Lowest Cost at Youngest Age:
- One of the biggest advantages for young adults: extremely cheap premiums if purchased early.
- Rates can increase by 20-25% each decade.
  
  “Going from your 20s to your 30s or 40s, you can generally see a 20 to 25% increase in premium.” ([04:47])
Health is a Major Factor:
- Insurers assess health status; maintaining a healthy lifestyle can help secure low rates.

5. How to Get the Best Rates ([05:38]):

Factors Affecting Premiums:
- Age (the younger, the cheaper)
- Health and lifestyle habits—quitting smoking and maintaining a healthy weight are emphasized.
Medical Exams ([06:29]):
- Applicants undergo simple exams (blood pressure, cholesterol, blood/urine samples) which influence premium.
Smoking Dramatically Increases Costs:
- Smoking can double or triple your rates over time.
  
  “If you're listed as a smoker... you're going to be looking at double or triple the monthly premiums of a non smoker.” ([06:46])
Always Compare Offers:
- Policies and rates vary between companies.
  
  “It's vital that you receive quotes from several different companies before you choose the one that works best for you.” ([07:33])

6. Host Diania Merriam’s Commentary ([09:05]):

Weighing Assets vs. Insurance:
- Diania personally opts out of life insurance, since she has no dependents and enough assets structured to avoid probate delay through payable-on-death (POD) accounts.
Life Insurance for Future Dependents:
- Shares example of friends who lock in low premiums now to cover anticipated future dependents:
  
  “I do know people who want to have children eventually that will buy a 30 year term life insurance policy at 30 years old... The reason why they do this is so that they can secure the lowest premium possible as life insurance does get more expensive as you age.” ([09:44])
Summary Reflection:
- “Term life insurance is relatively cheap. So for someone with dependents or who plan to have dependents, it seems like a no brainer.” ([09:55])

Notable Quotes & Memorable Moments

Jeff Rose on Neglecting Life Insurance:

“If you're single, you might not think that you need life insurance, but don't forget about the ones that raised you.” ([01:34])
On the Cost of Coverage:

“You would be paying less than two value meals at McDonald's a month for coverage. It's the responsible thing to do and it won't drain your checking account like one would think.” ([01:58])
Host Diania Merriam on Her Approach:

“The reason I don't have life insurance is simply because I don't have any dependents and I don't plan to have any dependents.” ([09:32]) “The key here is not having that stuff get tied up in probate so your family can actually use it when they need to. A bank account with a named beneficiary is called a payable on death account.” ([09:14])

Timestamps for Important Segments

01:00 – Introduction to topic; why young adults ignore life insurance
01:44 – Financial burden on parents and cost of basic term policy
03:14 – Role of life insurance in repaying parents’ investments
04:04 – When young adults don’t need insurance
04:47 – How premiums rise with age
05:38 – Factors determining premiums and steps to lower them
06:46 – The impact of smoking on policy cost
07:33 – Importance of comparing multiple insurers
09:05 – Diania’s commentary: assets, probate, and decision logic
09:44 – Locking in low premiums for future dependents

Summary Takeaways

Young adults should consider life insurance based on family responsibilities and potential debts, not just relationship or parental status.
Term life insurance is highly affordable when purchased early and with healthy habits.
Consider naming beneficiaries on financial accounts to avoid complications with probate.
Compare multiple policies and buy outside employer plans for portability and best rates.
Life insurance becomes a necessity with dependents, and locking in low rates early can give peace of mind for future responsibilities.

For actionable, nuanced insight into whether life insurance makes sense for you at your stage in life, this episode delivers practical steps and personal reflections, making the decision easier to navigate.

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Transcript19 lines

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[01:01]
C
This is optimal Finance Daily Life Insurance for Young Adults by Jeff Rose of GoodFinancialSense.com I remember starting my career as a young adult. I had a lot on my plate, working my nine to five, paying off my student loans and hoping to find my future spouse. One of the last things on my mind was buying life insurance. I could almost guarantee that for all young adults, buying life insurance is the last thing on our minds. So the question remains, should young adults consider buying life insurance? The compound answer is it depends. A lot depends on where you are in your life and where you plan to be in the next few years. If you're a young adult considering buying life insurance, here are some things to consider. Remember the hand that feeds you in retrospect, I regret not buying life insurance when I was a young adult. Sure, I was single and I didn't have any dependents, but my parents didn't have a lot of income and a lot of financial stability. If something happened to me and they had to pay for my funeral expenses, it would have affected them greatly. In fact, it would have been so great that I honestly don't know how they would have paid for it. Getting a cheap term policy would have cost me less than $10 a month and my parents would have been unscathed financially if something happened to me. If you're single, you might not think that you need life insurance, but don't forget about the ones that raised you. Life insurance is very inexpensive and even if you took out a small $50,000 to $100,000 policy, you would be paying less than two value meals at McDonald's a month for coverage. It's the responsible thing to do and it won't drain your checking account like one would think. If you're in the same boat that I was in single, with no dependents, you probably think the same thing I did, that life insurance would be a waste of time. But before you automatically discount it, talk to your parents about the possibility of something tragic happening and what kind of financial suffering they would experience if you were to pass away. What about debts? It seems nowadays that parents are helping their kids more and more, getting through school and getting their career started. I wasn't one of those lucky ones, but my wife was. Her parents sacrificed funding their retirement fully to pay for their daughter's tuition and cost of living while at school. Imagine if something happened to her and now all that money on books and fees is literally flushed down the toilet. If she would have bought cheap life insurance, her parents would have replenished all the money they had invested into her college education. But just because you're a young adult doesn't mean that student loans are your only debt. This is the stage of life when you're going to start looking to buy a house, right?
[03:49]
E
Even if you don't have a mortgage.
[03:51]
C
Right now, look a few years into the future. A couple years down the road, you could buy your first house, which means that you're responsible for your first mortgage. If you were to pass away with that mortgage, guess where it's going? Straight to your family. When shouldn't young adults buy life insurance? If you're debt free, your parents haven't handed you the silver spoon, and you're not married, then buying life insurance isn't necessary. At least not yet. When you do start your family, that's when life insurance should become a priority. Also, don't buy your life insurance through your employer unless you have a pre existing condition. The price is usually about the same buying it through a third party. Plus you won't have to worry about getting life insurance again if you change jobs. Life insurance is not expensive. Some of the major benefits of buying life insurance when you're young is that it's super, super cheap. As previously mentioned, the younger you are, the lower your costs are going to be in paying for your life insurance. Going from your 20s to your 30s or 40s, you can generally see a 20 to 25% increase in premium. Compound this with the fact that when you're younger you're super healthy and probably still find time to work out five days a week, which further increases your chances of locking in a low rate. Getting the Best Life Insurance Rates yes, as a young adult, life insurance is going to be cheap, very cheap. But this is the premium that you're going to be paying for many years to come. So you want to get the best rates that you can. You have one of the biggest advantages of finding cheap life insurance your age. Your age is the biggest factor in determining how much you're going to pay for your coverage. Buying coverage at 20 is much more affordable than purchasing life insurance over 50 years old, but it's not the only one. You can't do anything about how old you are. Trust me, you can't stop it. But there are some factors that you can change and save money on your insurance plan. The next biggest factor that the insurance company is going to look at is your health. They'll look for any pre existing conditions and your overall health to determine how much of a risk you are. The higher your risk level may be, the more they're going to charge you for insurance coverage. If you want to save money on your monthly premiums, spend a couple months improving your health. After you complete the initial paperwork for your policy, the insurance company is going to send a paramedic out to complete a simple medical exam to determine what kind of health you're in. During this exam, the paramedic is going to take your blood pressure, cholesterol, take a blood sample, and also a urine sample. These results are going to play a role in what kind of ratings you get. If you are carrying a few more pounds than you should, it's time to trim down that waistline. Being overweight increases your chances of having health problems later in life like diabetes or heart complications. It's time to actually use that gym membership that you've been paying for. Additionally, if you're a smoker or tobacco user, it's time to kick those bad habits once and for all. If you're listed as a smoker on your life insurance application, you're going to be looking at double or triple the monthly premiums of a non smoker. Sure, that could only raise your premiums by $20 or $30, but once you calculate that out through the course of the insurance policy, it adds to some serious cash. The best way to ensure that you get the best rates is by comparing dozens of companies before you choose the plan that works best for you. Each company is different and is going to view your applications differently. It's vital that you receive quotes from several different companies before you choose the one that works best for you. You just listened to the post titled Life Insurance for Young Adults by Jeff Rose of GoodFinancialSense.com this message is brought.
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[09:06]
C
While I do think life insurance could be a good idea for a young person who doesn't want to create a financial hardship for their family, I'd first consider what assets you have. I personally have enough cash and investments to easily cover any needs upon my death, but the key here is not having that stuff get tied up in probate so your family can actually use it when they need to. A bank account with a named beneficiary is called a payable on death account. People who opt for POD accounts do so to keep their money out of probate court in the event that they pass away. The reason I don't have life insurance is simply because I don't have any dependents and I don't plan to have any dependents. I do know people who want to have children eventually that will buy a 30 year term life insurance policy at 30 years old even when they aren't in a relationship. So in theory it could be years before they're married and or have children. The reason why they do this is so that they can secure the lowest premium possible as life insurance does get more expensive as you age. Term life insurance is relatively cheap. So for someone with dependents or who plan to have dependents. It seems like a no brainer. That should do it for another edition of Optimal Finance Daily. Have a great rest of your day and I'll see you on the Wednesday show tomorrow, where your optimal life awaits.