• Income Insurance

Reality Check: Buying Income Insurance Young Saves Money

4 min

You’re officially an adult. The world is your oyster, the open road is spread out ahead of you with endless possibilities...and here we are, telling you to think about disability income insurance (as we like to call it) or just referred to as disability insurance.

Now, hear us out before you roll your eyes and close your browser tab.

Early adulthood is one of the best times of your life, with a level of independence that you probably haven’t had before. But that also comes with a whole bunch of responsibilities too. There’s rent to pay, bills to keep on top of, and groceries (or, you know, takeout) to buy.

So now ask yourself this: What do you do if you find yourself unable to work thanks to an illness or injury and your newfound freedom is ripped out from under you?

That’s where disability income insurance comes in. It might seem like a scary and unnecessary prospect, but when one in four of us will become disabled at some point before we hit retirement age, it’s something that’s smart to consider and prepare for.

Here’s the encouraging news: Taking out a policy while you’re young and healthy is one of the smartest financial moves that you can make. Still not convinced? Let’s take a look at why disability income insurance is so important for young adults.

Disability income insurance 101: what is it?

Before we get into the specifics, let’s cover a quick overview of what exactly disability income insurance is. You might have heard it called long-term disability insurance, which is the more commonly-used name. But really, this type of insurance is there to protect your income should you become temporarily or permanently disabled during your working life.

In most cases, you’ll receive a direct payout from your insurance provider each month to help you cover your bills, daily expenses, or any other basic needs that you have to pay. It’s a financial safety net that can help to replace some of your income until you get back on your feet or, in the case of long-term disability, you reach retirement age and move over to Social Security benefits.

4 reasons you should get disability income insurance in your 20s and 30s

All things considered, disability income insurance is a sensible idea for anyone who’s still part of the workforce, no matter how old they are.

But why should you consider taking out disability income insurance now instead of filing it away on the “something to do when I’m more of an actual adult” to-do list? Well, there are a few good reasons for being proactive as early as possible.

You’re generally healthier at a younger age

It’s the same with any type of insurance, be it income, life, or even auto insurance. The less risky you are in the eyes of the insurer, the better your rates will be. Generally speaking, young adults are the healthiest and least likely to become seriously ill or injured compared to older adults, which makes you a great prospect for an insurance company.

Healthy people are significantly less likely to make a claim against a policy, which is reflected in the lower premiums that you’ll be offered at this age compared to 10 or 20 years from now. You never know what the future holds, so now is a good time to start looking into policies before you potentially develop a chronic health condition that could double your monthly rate or even rule you out of some disability income insurance payouts due to a preexisting condition.

Your income is lower so there’s less to insure

Disability income insurance typically covers around 60-80% of your take-home, or after-tax, pay. At this point in your life, you’re probably looking at the lowest salary of your career if you’re in an entry-level job or slowly working your way into your first managerial position.

Premiums are based on a number of different factors, but one of them is how much money you’re bringing in each month or year. To put it another way, insurers are looking at how much money they’d be on the hook for replacing if you ever filed a claim because you couldn’t earn that income through your normal job. The more money they’ll need to support you with, the higher your monthly or annual premium will be.

We know that you’re dreaming of the day that you get a promotion and a hefty pay increase to go along with it, but earning a low wage when you’re straight out of college or in the first few years of your career is part of the process. So, you might as well take advantage of your lower-income and the lower insurance premiums that come along with that while you can!

You likely aren’t in a risky job situation this early in your career

While being healthy and young is a great sign to providers that you’re a strong prospect to insure, one of the biggest factors that influence how much you’ll pay for insurance is risk. If you like to engage in dangerous activities like skydiving or motocross racing over the weekend or after work, your policy will be much more expensive than someone your age who likes to spend a quiet evening with a book or in front of the TV.

This is especially notable if you’re working in a seemingly risky industry like construction or even medicine. But your youth and inexperience will help you out here. At this stage of your career, you’re probably not the one in charge of a job site or taking point on projects. That means that the chances of you becoming injured or ill while performing your normal job duties are lower than someone in a more senior position at your place of work. And where there’s lower risk, there are lower policy prices.

You probably have a decent amount of student loan debt

We hate to mention the two words that most 20-somethings dread, but there’s likely never going to be a time in your life where you’ll have to pay back more student loans than right now (unless you go back to school, but that’s a whole other story).

If you become disabled before your loans are paid off, you’ll likely still be on the hook for those monthly payments. There are a few circumstances where that isn’t the case, like if you become permanently disabled and have only federal loan debt. But if you can’t prove this, you’ll need to pay up. 

Disability income insurance payouts can be used for any of your monthly bills, with no questions asked. That includes the repayments on your student loans. This means that you won’t be racking up penalties or facing potential legal action from missed payments, which would be significantly more expensive than whatever your insurance premiums are each month.

Invest in yourself and safeguard your future

We hate to bring the doom and gloom, but you’re not as invincible as you might have thought you were as a teenager or in your college days.

Preparing yourself for the unexpected is an important lesson to learn when you’re entering adulthood. Fortunately, setting yourself up with disability income insurance helps to take one big life stress off your plate.

If you’re ready to take advantage of your age and protect your future earnings, apply now for no exam disability insurance and receive policy details straight to your inbox in minutes. 

P.S. If you’re not in your 20s or 30s, it’s not too late! After all, today is always better than later. Contact Asteya for custom pricing on your next disability income insurance policy.

INCOME INSURANCE Protect your income from injury and illness. From quote to policy in minutes!

Join the Discussion