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Are You Working With Young Professionals?
Under 40 Years Old
Earning over $100K
With a Family
For those looking to purchase life insurance, there are a few policies that are well-suited for young professionals and their specific needs and goals.
Term life insurance policies are a great choice for the young professional. They often have lower premiums when compared with other life insurance policies. This is a great way to purchase a policy without going over budget.
Guaranteed Universal Life (GUL) is also an attractive option—this coverage is effectively a combination of term life insurance and whole life insurance. The GUL can help young professionals afford lifetime coverage at a price point that’s affordable to them. While it doesn’t offer as many benefits as other permanent life insurance products, it does allow for lifelong death benefit protection.
Another option for young professionals involving term life insurance is to buy term and invest the difference. This strategy is beneficial for young adults who do not have as much to invest solely in a life insurance policy. By investing the difference, individuals are able to get a greater return for a smaller amount of money.
There are many ways you can accumulate cash. Some of the more common ways are taxable investments, deferred investments, and retirement plans.
A LIRP plan is a life insurance policy (typically an IUL) that is designed to maximize cash value. This is done by reducing the death benefit to the lowest level while maintaining the tax benefits of life insurance. This will create the maximum amount of tax free income to be used during retirement.
It’s a common misconception that life insurance is only a necessary tool for those who belong in older age brackets. The truth is that clients are never too young to invest in life insurance. While young professionals can greatly benefit from a life insurance policy, many simply do not find it relevant to their savings plan nor do they believe it to be feasible financially, even though this is not true.
A person’s 20’s are a decade of great personal and professional development. Oftentimes, major life milestones sneak up, taking a budding young professional by surprise. While a young individual might currently be single and childless, that could change, and relatively soon. As people generally begin to settle down in their late 20s and early-to-mid-30s, their mindsets and priorities begin to switch. Suddenly there are spouses and children to think of and protect. However, by waiting until they’re older, a person could potentially encounter higher premiums. By purchasing life insurance at a young age, young professionals can generally expect to get less expensive coverage.
Even if settling down isn’t on the horizon for a young person with more pressing professional priorities, there remain significant reasons why life insurance should be purchased. Young adults who are relatively recent college graduates often carry a sizable student debt. In the event of death, any cosigners on private student loans may still be required to pay the remainder of the debt. In addition, life insurance policies can be used to off-set the burden of funeral and burial costs.
Life insurance solutions are always possible no matter a person’s age. If you have clients who fall into the Young Professional group and are seeking options that are right for their current personal and financial situations, we have strategies that work for them. Contact the Advisor’s Resource team to learn more.