Is Life Insurance Worth It for Young Adults?

Buying life insurance in your 20s can seem like another expense on an already tight budget, but financial professionals say it can provide important protection for your loved ones and offer long-term advantages if circumstances change.

Do young Canadians need life insurance?

There can be a significant, if temporary, need for life insurance among younger Canadians, says Andrea Thompson, a certified financial planner at Modern Cents. Early adulthood often comes with liabilities such as student loans, mortgage co-signers, and the potential loss of future income. These factors can create a genuine financial risk for partners, parents or co-signers if a young person dies unexpectedly.

For many people in their 20s, life insurance is not top of mind. Still, a modest policy can prevent family members from suddenly inheriting debt or facing financial hardship. As Jeffrey Talor, director of sales at Canwise Life Insurance Services, notes, life insurance is primarily about protecting loved ones, preserving a legacy and addressing tax or estate concerns. Securing coverage can ensure family members aren’t left exposed in the event of a premature death.

What are the benefits of getting life insurance when you’re young?

Purchasing life insurance in your 20s comes with multiple advantages. One of the most practical benefits is locking in lower premiums early. Insurance premiums are calculated using several factors, and age and health are major determinants. Younger applicants generally face fewer medical hurdles and lower mortality risk, which can translate into significantly cheaper coverage.

If you secure a term policy while you are healthy and young, those premiums are fixed for the length of the term, even if your health changes in later years. That predictability can be valuable: it helps protect your family and gives you financial certainty without risking higher rates later in life.

What type of life insurance should you buy?

Term life insurance is often the most cost-effective choice for people in their 20s and 30s. It provides coverage for a defined period—commonly 10, 20 or 30 years—at steady premiums. For many young adults, term insurance covers the years when debts, mortgages and dependent care are most pressing.

Permanent life insurance, such as whole or universal life, offers lifelong coverage and usually carries higher premiums. These policies can include a cash value component that accumulates over time and can be borrowed against or used as collateral for loans. While permanent coverage has benefits for estate planning and creditor protection, it also comes with higher costs and different long-term considerations.

Jeffrey Talor points out that rates tend to be most favorable for people between about 20 and 30. Costs typically rise in the 30–40 band and increase further with age. Despite perceptions that insurance is prohibitively expensive, affordable term options are often available—sometimes for the equivalent of a few dollars a day—making it practical for many young adults to obtain basic protection.

How old do you need to be to buy life insurance in Canada?

There’s no single “right” age to buy life insurance. Some people in their early 20s may not yet have significant assets, dependants or a mortgage, while others may already need coverage because they’ve co-signed loans or started a family. Thompson recommends an insurance needs analysis as part of holistic financial planning to evaluate risk based on age, employment benefits, debt levels and life stage.

Many Canadians have some level of group life insurance through their employer, but that coverage may be limited. Buying personal coverage can close gaps and is flexible: you can buy policies in stages as your life evolves. Talor notes that policies can be stacked—start with a smaller policy in your 20s and add more coverage later when your responsibilities grow.

Deciding how much to spend should start with a realistic look at your budget and priorities. Speak with a licensed broker or financial planner who can explain policy terms, help you compare term and permanent options, and simplify the application process so you understand exclusions, riders and beneficiary choices up front.

Read more about life insurance in Canada:

• Life insurance for kids: Do you really need it?
• 5 reasons to buy life insurance—right now
• Do I really need life insurance?
• Term vs. whole life insurance: Which type of policy is best?