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Why It's Time to Buy Life Insurance Today

Updated August 2, 2020 . AmFam Team

Life insurance is a crucial element of keeping your love ones and dreams protected. Let’s take a look at why you should get life insurance when you’re young.

Life insurance has been around for centuries, and there’s a reason why it’s just as important today as it was hundreds of years ago — it’s a way to financially protect loved ones in the event of a death.

Even when you’re young, single and have no dependents, life insurance can be beneficial at every stage of life. It’s also a crucial element of sound financial planning. Let’s take a look at why you should consider buying life insurance today.

How Young Can You Get Life Insurance?

The younger you are when you buy life insurance, the more affordable it is. Insurance costs are also lower when you are younger and in good health. As a result, people in their 20s pay less for insurance than those over 45. Term insurance, whole life insurance, and flexible life insurance plans are all types of insurance young people can take advantage of in their 20s.

Why Get Life Insurance Young?

Your health is a factor

The cost of insurance premiums is lower when you are young and healthy. Your premium will be lower because your health is an important factor in determining the premium payable. You may even be exempt from medical exams if you are in good health.

Protection of income

Life insurance is ideal to protect your income should you die unexpectedly. When you’re gone, so is your income, and the money your beneficiaries receive from your policy can help them make ends meet when your salary stops. In a nutshell, you can replace your lost income and protect your family financially with your insurance policy.

6 Reasons to Get Life Insurance

There are countless ways life insurance can help financially protect your loved ones after you pass away, here are six top reasons why life insurance is an absolute must for you and your family.

1. Income replacement

If you or your partner were to pass away, you would lose that income, which is most likely part of your everyday budget. Having life insurance can help your family maintain their current standard of living without having to worry about that lost income.

2. Coverage for debt and financial risk

A life insurance policy can help pay for debts that could be too heavy on one partner’s income alone. Having life insurance can help your loved ones pay for debts like student loans, a mortgage, credit card debt and any other financial debt you leave behind.

3. Cover final expenses

The cost of final expenses, like funeral costs, medical bills or even hospice fees can add up to tens of thousands of dollars. A life insurance policy can help relieve your family from the financial burden of these expenses. Learn more about how life insurance helps take care of final expenses.

4. Living benefits of life insurance

Most people get life insurance to help financially protect their loved ones after they’ve passed away, but a permanent life insurance policy offers living benefits, too. For instance, your policy has a cash value component that you can use while you’re still alive. If enough cash value has accumulated, you can take a loan* on this money to put toward things like a down payment on a home, college tuition or to pay an unexpected medical bill. Read more to learn about the living benefits of life insurance, including cash value in life insurance.

5. Ability to care for a disabled loved one

If you have a child or partner with a disability, or parents who need to be looked after, having life insurance can help give you peace of mind that they would be financially protected even if you were gone. Read more about life insurance to care for disabled loved ones.

6. Financial protection for your children

If you or your partner were to pass away, that may mean there would only be one stream of income coming into the household — making it difficult to save for things like your kids’ first car or their college tuition. Having life insurance can help pay for expenses like these that help strengthen your children’s futures.

Life Insurance For Any Stage of Life

These are just some of the ways life insurance can benefit you and your loved ones. Check in with your American Family Insurance agent (Opens in a new tab) to see which type of life insurance coverage is right for you. You’ll find life insurance can help you gain peace of mind with the knowledge that what matters most will be protected even after you pass away.

*Disclaimer: Any loans taken from your life insurance policy will accrue interest. An outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim. If the loan balance grows too large for the cash value to support it, the policy could terminate.

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    Life Insurance for Children

    You understand the importance of providing a secure financial future for your loved ones, and purchasing a life insurance policy on a child (with the ability to transfer ownership of the policy in the future when the child becomes an adult) can help you do just that. Let’s take a look at how a life insurance policy can help you proactively protect your loved one’s financial future.

    Why Is Children’s Life Insurance a Good Purchase?

    A life insurance policy is a purchase that can last a lifetime. Whether you purchase it on your child or grandchild, there are a number of benefits.

    Low premiums

    Since the cost of life insurance depends largely on things like age and health, purchasing a life policy when they’re young can lock in a low premium for the entire policy payment term.

    Protect their ability to secure life insurance in the future

    One of the biggest benefits of buying life insurance on a child is protecting their ability to secure life insurance in the future. When purchasing a permanent life policy on a child, your policy might include (if not, you might have the option to add) a Guaranteed Purchase Option (GPO) benefit to ensure the opportunity to purchase additional life insurance on them at certain ages and life events down the road without a medical examination or proof of health.

    Build cash value

    A permanent life insurance policy has the ability to accumulate cash value year after year. The earlier you start, the longer cash value can build, so when you purchase a life insurance policy for children when they’re young, the cash value has a lot of time to grow before they may need to use it. And, if ownership has been transferred to the adult child, they can even borrow against their cash value* if needed.

    Should I Purchase Permanent Children's Life Insurance?

    If you’re purchasing life insurance on a child, most people select permanent life insurance since it is built to last the child’s entire life. A permanent life insurance policy provides not only a death benefit, but, as mentioned before, the policy also has living benefits, like the ability to accumulate cash value.

    Purchasing life insurance can be a practical and simple way to help protect your loved ones’ dreams. Check out American Family Life Insurance Company’s DreamSecure Children’s Whole Life permanent life insurance policy to learn more. Or you can also check in with an agent — they’ll be able to answer any questions you may have about children’s life insurance options through American Family Life Insurance Company.

    This is a brief description of coverage and is subject to policy and/or rider terms and conditions which may vary by state. Fixed and guaranteed premiums are statements about the policy as determined at issue, and any changes made to a policy may affect the premium and are subject to our underwriting rules. The words lifetime, lifelong and permanent are subject to policy terms and conditions. DreamSecure Whole Life Insurance policies mature at age 121. Please check with an American Family agent for details on coverages and restrictions.

    *Any loans taken from your life insurance policy will accrue interest. An outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value if surrendered. If the loan balance grows too large for the cash value to support it, the policy could terminate.

    Policy Forms: ICC17-223 WL, Policy Form L-223 (ND) WL, Policy Form L-223 WL, Policy Form ICC17-224 WL, Policy Form L-224 (ND) WL, Policy Form L-224 WL

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    The Difference Between Annuities and Life Insurance

    What’s the difference between life insurance and annuities? It’s a common question. If you wonder what it takes to secure a financial future for yourself and those you love, it may be one you find yourself asking. And that’s a very good thing.

    The bottom line: life insurance can help provide your loved ones with the financial peace of mind they deserve if you were to pass away. Annuities provide a tax-deferred way to grow money and provide an income stream. Both should be considered as part of a long-term financial plan.

    Although both share some similarities, the overall purpose of each is very different. Let’s take a quick look.

    Life Insurance Helps Protect Their Financial Future

    When comparing life insurance and annuities, the biggest difference is that life insurance is designed to help protect against a financial loss for others after your death. Annuities on the other hand help protect you financially while you’re still alive.

    Life Insurance helps to financially secure your loved ones’ future, since the death benefit can help with things like replacing your income and meeting important financial needs such as:

    • Funeral costs
    • Daily living expenses
    • Mortgage payments
    • College funding

    When you purchase life insurance, you aren’t purchasing it for you — it’s really a purchase for the people you want to take care of.

    If you want to find the right life insurance for you and your loved ones, American Family Life Insurance Company has the customized options you're looking for. If you want to learn even more life insurance, read up on the specifics of how life insurance works.

    Annuities Help Prepare You for the Future

    Think of an annuity as a tool that could help meet your retirement needs. The primary purpose of annuities is to create income for you, and this can be done in a few different ways. You can set up payments that last for your entire life, a specific period of time or a combination of both.

    There are many potential benefits of annuities. Some include:

    • The ability to grow account value on a tax-deferred basis
    • The potential for a future income stream that can’t be outlived
    • The possibility of a lump sum benefit that can be paid to a surviving spouse

    How do annuities work?

    You can buy an annuity by giving your insurance company either a single lump sum or making payments over time. The insurance company then invests your money — referred to as a premium or purchase payment — in different ways depending on the type of annuity you select.

    You can buy an annuity that begins making payments back to you right away — this is called an immediate annuity — or if you prefer, annuities are available that delay making payments to you for an extended period, sometimes many years.

    Start Planning for the Future Today

    Life insurance and annuities work in tandem to protect a future for yourself and those you care for. Now that you have a high-level overview, discuss with your agent how these options fit your needs.

    Annuities are long-term insurance contracts intended for retirement planning. Annuities are issued by Protective Life Insurance Company located in Nashville, TN, with administrative offices at 2801 Highway 280 South, Birmingham, AL 35223, through a relationship with American Family Brokerage, Inc., 6000 American Parkway, Madison, WI  53783.

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    How Often Should You Review Your Life Insurance?

    When you think about why buying life insurance is important, you probably think of financially protecting your family and loved ones in your life when you pass away. With life insurance in place, you can help ensure financial support for those that matter most. But have you spent time reviewing your life policy and ensuring it still meets your needs since purchasing it?

    We recommend reviewing your life insurance every year. Having the right coverage in place means less for you — and those you care for — to worry about. Because so much can happen in 12 short months, it's important to make sure your policy is right for you and your family today.

    To get you started, we’ve put together a list of 9 key reasons why you should review your life insurance policies every year.

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    How Cash Value Life Insurance Works

    You most likely purchased life insurance for the financial protection it provides your loved ones in the event of your death — but there can be some additional benefits to life insurance. Some life insurance policies, such as DreamSecure Whole Life Insurance offers the opportunity to build “cash value,” otherwise known as a living benefit.

    That living benefit is the value in your policy that may be borrowed against or paid out if the policy is surrendered before death.* Let’s take a closer look at how cash value in life insurance works.