Do young people need life insurance?

Published: 02 July 2019 | Updated: 06 May 2021 

For young adults in the UK, stepping into the world of financial planning, budgeting and insurance for the first time can be daunting. It's a learning experience and it's likely there will be a bit of trial and error involved. Chances are life insurance isn't the first thing you'll think about but at some point, you may wonder, do young people need life insurance?

As is the case at any age, we're all at different stages in our lives. Some of us may have found our life partner and married early. Or perhaps it's all been about career progression so far and saving up for our first home. Maybe we're still in education. Whatever the stage you are at in life, it is the responsibilities and financial commitments you have, rather than your age, that should be at the forefront of your mind when thinking about whether life insurance is right for you.

Why you might need life insurance as a young adult

You're on the property ladder

Research led by Legal & General and the Centre for Economics and Business Research (Cebr) found that 56% of those under the age of 35 making their first home purchase did so using a gift from family or friends. With 71% of these new homeowners saying they would not have been able to make the purchase without this help from the 'Bank of Mum and Dad'. The research also revealed that the average figure lent to first-time buyers in this group was £19,000. Unlike a personal loan from a bank, your parents or loved ones are unlikely to demand their money if you were to pass away unexpectedly, but it would still leave them out of pocket. Therefore, you may wish to have life insurance and a will in place to ensure they are paid back should you pass away.

Of course, if you've secured your own home and share it with a significant other, you'll probably want to think about covering the outstanding debt on the mortgage, perhaps with mortgage protection life insurance. That way, if you were to die before the mortgage is paid off, your partner would have one less thing to worry about.

Alternatively, you could consider leaving a lump sum behind with level term life insurance. This could be used to pay off debt or replace your income for a period of time and help your family pay the bills.

Find out more in our guide, 'Do I need life insurance for a mortgage?'.

You have debts that could pass to someone else

Your mortgage is likely to be your biggest debt but whatever your stage in life, it's possible you've taken out a loan, credit or other agreement with your partner, a parent or a friend. A guarantor loan is an example of how a potentially expensive bill could land at a friend or loved one's door after you pass away. Life insurance may be worth considering in order to cover your credit agreements, as loans of this nature won't disappear if you're not around to pay them.

You'd like to pass something on

You could leave a sum behind for a charity, children's hospital or other cause close to your heart. However, you should consider cover to repay your mortgage and loans for the benefit of your dependants as your priority.

You've already started a family

Whatever your age, there's a chance you've found your perfect partner and have kids at home. If this is the case for you, life insurance may be a higher priority than it would be for someone with no dependants. If something happened to you, how would the bills, rent or mortgage be paid? The thought of your partner having to work to provide for the little one(s) during such a devastating time probably isn't a nice one.

Life insurance may help provide peace of mind that your partner, and your kids if you have them, will receive financial support that could help alleviate any financial burdens should you die.

It's also worth considering how you would cope financially should your partner pass away before you. You may want to think about purchasing life insurance for them too.

Other benefits of buying life insurance while you're young

The monthly premiums for life insurance are typically higher the older you get. Life insurance companies look at a number of factors when they determine how much you'll pay but generally, your age, lifestyle & health and smoker status are three key areas of focus. Find out more by reading our guide, 'How are life insurance costs calculated?'.

If you buy a life insurance policy for a set number of years while you're younger and in good health, you're likely to save money and benefit from cover from a younger age. Your policy could stay active and cost the same amount per month even as you get older.