Given this thinking, most unmarried residents in their 20s and early 30s, are tempted to forgo life insurance until a later date. And since most are highly leveraged with school loans and cash-strapped, it’s understandable that they might want to save a few dollars.
However, by saving a few dollars on life insurance, are they putting the financial futures of their loved-ones at risk? In some cases, they could be. To make sure you don’t fall into this category, consider whether any of the following apply to you:
- You Are In Debt
It’s likely you accumulated debt while acquiring your MD. That you now have to devote a chunk of your financial resources to pay it off is not a reason to skip financial protections. In fact, it should be motivation to do the opposite and put such safeguards in place.
Here’s why. For the vast majority of medical students who are indebted when graduating, the average debt burden is over $190,000.[i] If a student passes on, who do you think would be responsible for paying back that money?
For graduates with federal student loans, there’s good news — the debt would be discharged. However, when it comes to private loans, the situation is more difficult. That’s because private loans often require a cosigner. In the event of a graduate’s death, the cosigner assumes the debt. To make it worse, the borrower’s death may trigger a loan default, meaning the balance is due immediately.[ii]
Did anyone co-sign your loan? Who? Many residents’ parents back their children’s loans. If that’s your situation, consider how such a financial burden would impact your parents. If the potential of leaving them with the weight of your loans concerns you, then you would be well advised to buy life insurance and to name them as the beneficiaries. That way, in the worst case scenario, they would have money to help cover the loan repayment.
- Other People Depend on Your Income
The number of single people living together before marriage climbed by 29 percent from 2007 to 2016. Half of those who cohabitate are under the age of 35.[iii] Given that, it’s possible that you’re technically “single,” but have a boyfriend or girlfriend who lives with you and relies to some degree on your income.
Also, consider whether you have any older relatives who may need your support in the future. For instance, while your parents or grandparents may be financially independent today, what would happen if any of them needed long-term care? Could they afford it without your support?
Should something happen to you, do you worry about the financial well-being of your significant other, parents or grandparents? If so, life insurance may be in order.
- You Like to Make Purchases When They Cost Less
It’s easy for people to convince themselves that they don’t need life insurance when they’re young because there’s a lower likelihood of death than when they grow older. However, the life insurance companies have already factored the lower risks into their rates. So purchasing a basic plan when you are young is less expensive than most people think.
If you want to know how much it would cost you, check out our premium calculator or an estimate. You will note that term life can cover a period, such as 10 or 20 years, or up until you are 75.
As you weigh your options, bear in mind that the price of coverage will increase if you buy insurance when you are older. That’s because your life expectancy will decline and you may develop health issues.
If anyone would experience financial hardships if you were no longer around, you should consider buying life insurance. Also, if you have accumulated a substantial amount of debt that you do not want to leave as your legacy, life insurance can give you peace of mind. The same is true if you are living with a significant other who may depend on your income today or have a parent who might turn to you for future assistance. Given the low cost of life insurance for young people, you may decide that some financial protection for your loved ones is well worth the investment.
[i] AAMC, Medical Student Education: Debt, Costs, and Loan Repayment Fact Card, October 2017
[ii] Student Loan Hero, What Happens to Student Loans When You Die?, December 18, 2017
[iii] Millennial, Cohabitation: The Trend of Living Together Before Marriage, January, 28, 2018
