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At age 25, you’re most likely concentrating on your career, paying off loans, and trying to build up your savings. Life insurance might not be on your mind, but if you’re interested in protecting your finances or families, now is the best time to purchase a policy. You could lock in a low premium in your mid-20s, and bump up your coverage for a few dollars a month.
What is the best life insurance policy for 25-year-olds?
What's in this guide?
- What is the best life insurance policy for 25-year-olds?
- Which is the cheapest life insurance company for 25-year-olds?
- What is the typical cost of life insurance for 25-year-olds?
- How much life insurance do I need around age 25?
- What is my risk of dying in the next five years?
- Compare life insurance companies for 25-year-olds
- Bottom line
We recommend: Term life insurance
Term life insurance is the simplest and cheapest type of coverage, making it the best choice for most 25-year-olds shopping for a policy. While it’s cheap, life insurance is still an expense, so you want to ensure you buy a policy you can afford. With term life insurance, the premiums are predictable, so you know exactly how much you’ll pay each month or year. And if something happens to you, your policy would kick in to take care of your loved ones and cover any debt, like student loans.
Our top pick: Haven
Millennials tend to gravitate towards companies that offer life insurance policies online. Haven Life has a seamless application process. It’s mobile-friendly and takes around 10 minutes to complete, and if you’re approved, your coverage could go into effect instantly. Backed by parent company MassMutual, the fintech insurer sells term life policies lasting 10, 15, 20 or 30 years. It stands out for allowing policyholders to add two common riders to their coverage.
Which is the cheapest life insurance company for 25-year-olds?
To find the cheapest insurer for 25-year-olds, we compared the rates for a $250,000, 20-year term life policy from 10 major carriers.
According to our research, Pacific Life offers the lowest rates for nonsmoking men at $15.66 a month. For nonsmoking woman, Legal & General tends to charge $12.98 a month.
Smokers always pay more for coverage. A man could be charged $35.26 a month with Transamerica, while a woman might score a rate of $30.10 a month with both Transamerica and Legal & General.
Monthly costs of a 20-year, $250,000 term life policy for a 25-year-old in good health
|Legal & General||$15.81||$12.98|
*Based on sample rates from Policygenius, August 2019.
What is the typical cost of life insurance for 25-year-olds?
The cost of life insurance is highly personalized, but two big factors that come into play are age and health. For this reason, your 20s are the best time to shop around for a policy. At this age, it’s easy to qualify for low preferred rates.
The average cost of a $250,000, 20-year term policy for a nonsmoking man in perfect health is around $17.48 a month. For a nonsmoking woman in perfect health, the same amount of coverage would be around $14.56 a month.
If you’ve gotten married, bought a house, or acquired assets or debt, you could consider buying a higher level coverage. At age 25, the difference between $250,000 and $500,000 or even $1 million in coverage is just a few dollars a month.
Let’s look at a 25-year-old nonsmoking woman. For a $250,000 policy, Legal & General — the cheapest company — might charge $12.98 a month. If she wants to take out a $500,000 policy, the same insurer could offer a rate of $19.65 a month — a price difference of less than $10 for double the coverage. And to lift coverage to $1 million, the cost could be just $31.65 a month.
How much life insurance do I need around age 25?
To find your sweet spot, assess your financial responsibilities now and in the near future. Be honest about your needs, and think about student loans, existing debts, marriage and children. If you have aging parents, you might want to consider the costs of their care, too. You can use our calculator to help determine your life insurance needs.
It’s a good idea to review your policy as your situation changes. For example, if you buy a home, have a child or get a pay rise, you may decide to boost your coverage.
What is my risk of dying in the next five years?
With time on your side, a typical, healthy 25-year-old is expected to live a long life. For a man, the risk of dying in the next five years is 0.70%, and the figure for women is lower at 0.29%.
Odds of passing away for a 25-year-old
|Within the next…||Male||Female|
Life expectancy rates are merely calculations based on averages of mortality among specific population, gender and age groups. They do not predict the specific life expectancy of any one person - including you. If you're concerned about your overall health and risks, talk to your doctor or health professional.
Compare life insurance companies for 25-year-olds
While your priorities as a 25-year-old might be establishing your career, paying rent and traveling, it’s worth looking at life insurance. When you’re young, fit and healthy, you can qualify for low preferred rates — and for most types of policies, those rates are locked in.
Though it can be cheap, life insurance is still an expense. If you decide to explore life insurance when you’re 25, shop around for the best policy with our comprehensive guide to life insurance.
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