Smiling young couple standing together outside

If you’re young and single, you may think that the things you want out of life are attainable with persistence and planning, and that you have lots of time.

But the reality is, you just never know about that last part.

This is why you might want to put life insurance — a financial product often overlooked by young adults — on your radar.

Don’t dismiss it

Fewer than 20% of millennials say they’re likely to buy life insurance, according to LIMRA, an insurance research and consulting firm. 60% say Internet, cable and cellphone bills are higher priorities, while about 3 out of 10 millennials say saving for a vacation is more important than buying life insurance, a LIMRA survey found.

“There’s a feeling like, ‘I’m young, the odds are slim,'” says Tony Steuer, an insurance literacy advocate and author of “Questions and Answers on Life Insurance.”

“Part of it is they may not have experienced any of their peers dying,” he says.

But just because you’re a young, healthy single with no children doesn’t mean you should disregard the need for life insurance coverage.

“If there’s anyone who sort of depends on the income of a (millennial), the (millennial) should be thinking, ‘What would happen (to that person) if something happens to me?'” says Nilufer Ahmed, a senior research director at LIMRA.

Why you may need (more) life insurance

If you offer some financial support to your parents or other relatives, or if you fall into the majority of young adults with sizable student loan debt, you ought to think about life insurance. Keep in mind, for example, that if someone has co-signed on a loan for you, the obligation could fall on your co-signer to pay off your debt if you are no longer around.

Chances are you already have some life insurance — group coverage — if you’re working full time, Ahmed says. “The question comes up, ‘Do I need to go out and buy (more coverage)?'” she says.

To answer that question, you must calculate how much your family would need if you were suddenly out of the picture, says David Marlett, a professor in the department of finance, banking and insurance at Appalachian State University in Boone, North Carolina.

Assessing your coverage needs

Marlett says you must consider:

  • How much money your family would need to cover funeral expenses if you were to die unexpectedly.
  • How much would be needed to replace any income that you’re contributing to your family.

“When dealing with the loss of a loved one, the emotional side is a big enough struggle,” Marlett says. “If you can take the financial struggle off the table, that makes it much easier for the surviving family members to focus on just the emotional side.”

Term life insurance may be the best option for a 20-something on a budget, he says. It covers you for a determined time period, such as 20 or 30 years, and is relatively low-cost.

“You can get a lot of coverage from an excellent insurance company for very little money,” he says, adding that a healthy 25-year-old could buy $1 million in term coverage for under $40 per month.

Term vs. perm

Another option is permanent life insurance, which costs more than term but covers your entire life.

Corey Fick began shopping for life insurance once he and his wife started earning enough money to put aside some savings after paying the monthly bills.

“I knew that I wanted to get it as soon as possible so that she would be covered, while also locking in a low premium due to my perfect health,” says Fick, founder of the personal finance blog 20’s Finances.

He went against the grain and bought a permanent policy.

“Since I was looking at life insurance in my early 20s, I did not like the idea of paying for a life insurance policy for 20 to 30 years and then losing all of the benefits at the end of the term,” Fick says.

He adds: “While I wanted to prepare for the worst, I am planning to live well past my 50s.”

Do your homework

Life insurance can be hard to understand, warns Ahmed. “Usually, it’s a lack of knowledge that prevents (young adults) from being more secure in their financial situation.”

So, read up — like you’re doing now. And be sure the insurance company you select is financially solid, Marlett says.

“This is probably going to be a 20-year relationship,” he says, recommending that you check rating services such as Moody’s and A.M. Best. “Go with a highly rated company.”

Most of all, keep it simple. “Focus on the need to replace that lost income,” Marlett says. “There are a lot of complicated products out there.”