Do I Even Need Insurance in My 20s or 30s?

It’s a fair question, and one that comes up more often than people admit.

You’re in your 20s or early 30s, things are starting to come together, and someone brings up insurance. Maybe it’s a friend who’s just taken out cover, maybe it’s something you’ve seen online, or maybe it comes up when you’re sorting out a mortgage.

Your first reaction is usually something along the lines of: “Do I even need this yet?”

At that stage of life, insurance can feel like something for later. Something for when you’ve got a house, kids, and more responsibilities. And in some cases, that instinct isn’t completely wrong. But the answer isn’t just yes or no. It depends on what would actually happen financially if something went wrong.

The Real Question: What Are You Actually Protecting?

Insurance is less about the product itself and more about the financial impact of risk.

A useful starting point is looking at your current situation. Do you have dependent children? A partner who relies on your income? Any debt, like a mortgage or personal loans? Are you working towards something significant financially that could be disrupted?

If most of those don’t apply yet, your need for certain types of insurance may be lower. If they do, then it becomes more relevant fairly quickly.

If It’s Just You, You Might Not Need Much

If you’re single, have no dependents, and your family would step in to support you if something went wrong, your situation is quite different from someone with more financial responsibility.

For example, if you passed away, there may not be anyone financially relying on you. And if you couldn’t work for a period, you might be able to reduce your expenses or rely on family support.

In that case, it’s reasonable to question whether you need life insurance right now. For some people, the answer may be no, or at least not yet.

But that doesn’t necessarily mean you don’t need any form of protection at all.

Where People Sometimes Get It Backwards

Someone in their early 20s wanting to set up life insurance straight away. 

It’s not a bad instinct and it’s great to get on top of the boring financial things early, but it’s not always the most relevant starting point.

If no one is financially dependent on you, life insurance may not solve a meaningful problem right now. But if you think about what’s more likely to happen over the next 5 to 10 years, it’s often not death that creates the biggest financial impact.

It’s things like a serious illness or an injury that stops you working for a period of time.

That’s where cover like income protection or medical insurance can sometimes be more relevant earlier on, particularly while you’re young and generally have fewer pre-existing conditions.

A Practical Example

Take someone in their mid-20s with no debt, no kids, and a stable support network.

If they were to pass away, there may not be a financial gap that needs to be filled. But if they couldn’t work for several months due to injury or illness, that could affect their ability to cover rent, keep up with expenses, or maintain any savings momentum.

In that situation, income protection or medical insurance might be worth considering before life insurance, depending on their priorities and budget.

When Insurance Starts to Matter More

As your situation changes, the role of insurance tends to become clearer.

This often happens when you take on a mortgage, enter a relationship where income is shared, have children, or build a lifestyle that relies on consistent income.

At that point, the financial impact of something going wrong becomes more significant. It’s no longer just about you. There are other people or commitments that could be affected.

That’s usually when insurance shifts from being optional to something worth thinking about more seriously.

It’s Not All or Nothing

One of the more common misconceptions is that insurance is a big, all-in decision that needs to be fully sorted upfront.

In reality, it can be built over time.

You might start with one type of cover that addresses the most immediate risk, keep the structure simple, and adjust things as your situation evolves. That approach is often more practical than trying to predict everything early on.

Where Good Advice Can Help

If someone in their early 20s sits down with an adviser and asks about insurance, the conversation shouldn’t jump straight to setting up policies.

A good adviser should spend time understanding what’s actually relevant for that person. In some cases, that might mean recommending a different type of cover than the one initially asked about. In other cases, it might mean suggesting that insurance isn’t the priority right now.

For example, if someone has no dependents but relies heavily on their income, income protection or medical insurance may be more relevant than life cover. Or it might be that their focus should be on building savings or reducing debt first.

That kind of conversation is really valuable for the future of NZ young adults. 

A Better Way to Think About It

Instead of asking “Do I need insurance?”, it can be more useful to ask “What would happen financially if something went wrong?”

Would your income stopping affect anyone else? Would you be able to cover your own costs? Would your plans need to be put on hold?

Looking at it that way tends to make the answer clearer, without forcing a decision too early.

Conclusion

In your 20s and early 30s, you may not need every type of insurance straight away. If your financial position wouldn’t change much if something happened, keeping things simple can make sense.

But for most people, as responsibilities grow, having some level of protection becomes more relevant.

The key is making sure it actually fits your situation, rather than putting cover in place just because it feels like something you should do.

If you’re unsure, a conversation with an adviser can help you understand what matters now and what can wait.

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Disclaimer

This article provides general information only and does not consider your personal circumstances, objectives, or financial situation. You should consider seeking personalised financial advice before making any decisions.