6 Reasons Millennials Should Consider Life Insurance
There is facial recognition software that will name your friends and ask you if you want to tag them on your social media profile. You can text someone a message from half a world away, and you can play a video game with a stranger on another continent. Technology has accomplished so many amazing things in the past 20 years, but there’s still no way to bypass our own mortality.
While it’s never pleasant to discuss, your death is inevitable. It is easy to forget this when you’re young. Everything seems to be going as planned and many young people have little connection to the heartache of death, outside of the passing of their grandparents.
But early adulthood is a preferable time to purchase life insurance. If you’re not sure whether you need life insurance or not, consider the following:
1. You have dependents. First of all, life insurance is not for you. It’s for those you leave behind. The people who depend on you—your dependents. Dependents don’t have to be children. For insurance purposes, these are people who rely on your income, who would have to go without, should something happen to you. This could be a spouse, a live-in boyfriend/girlfriend with whom you own a house. You should also consider your parents, grandparents, siblings with special needs, etc.
Additionally, if you have a stay-at-home spouse, consider the financial outcome of your death. They would be forced to secure employment outside of the home. How quickly do you think your spouse could find a job? Life insurance helps give you peace of mind, knowing your loved ones will receive a life insurance benefit after your death.
2. Premiums may be lower. Life insurance premiums are risk calculations based on mortality.
Premiums are based on the age of the applicant at the time of purchase and term life rates usually increase with age. If you purchase a policy as a 20-something year old, it will be at a lower rate than if you wait until you’re 40. You will lock in those savings for the lifetime of your policy.
Plus, qualifying for coverage as a healthy millennial can be a lot easier and less expensive than applying after you’ve been diagnosed with a health condition. Don’t wait. A health issue can happen overnight and qualifying for a life insurance policy can be a very different experience once you’ve been diagnosed.
3. You’d like an additional savings vehicle. If you always have a reason to dig into your savings, consider purchasing a permanent life insurance policy that not only has a death benefit but a savings component as well. You can borrow against it as well as use it in retirement, depending on the policy and company behind it.
Think of a permanent life insurance plan as a cash value building asset that will help secure your loved ones and your retirement. Your generation understands the importance of saving for its future. A permanent life insurance policy can help you do that with minimal effort on your part. Once you’re retired, you can draw on the savings portion of the policy.
4. You’d like to supplement your company-backed insurance. Millennials who are fortunate enough to have a good paying job with excellent benefits may receive life insurance through their company. While this provides some peace of mind, consider purchasing other, independent coverage. If you become sick and are no longer able to work, your work policy may no longer cover you. If you’re diagnosed with an ongoing illness, you may not be able to secure a life insurance policy at that time. Now, when your family needs the benefit the most, they may no longer have protection from your employer’s plan. Plus, many basic coverage policies will not cover everything your family needs at a time when they are ill-equipped to provide for themselves.
5. You want your funeral expenses and debts covered. Even if you don’t have dependents, you should consider your debts and your burial expenses. The average funeral alone can cost thousands of dollars. Some debts would be waived with your death while others would be collected through whatever assets you left. Are your loved ones able to handle these burdens or will this create a financial hardship for them?
Millennials will want to decide what amount of coverage they need to pay for both funeral expenses and their recoverable debts when deciding an amount of insurance coverage.
6. You’d like to leverage riders for more coverage. Life insurance is not all about the death benefit paid out to your loved ones. There are also riders that can be added to policies to address needs for things like long term care and disability. If you could envision yourself requiring long term care in the future, either due to old age or disability, life insurance can be helpful. Many young people simply do not have the financial means necessary to cover these sorts of long-term care expenses. A life insurance policy with the right riders can help with that.
You are more likely as a young person to be injured in an accident than you are to be killed in one. If you were injured and unable to work for a certain period, or permanently disabled, do you have a plan in place to cover your expenses? A waiver of premium rider can help pay the premiums on your life insurance policy if you become totally disabled.
Frankly, many people will never need the financial comfort provided by a life insurance policy while they’re young. But if your family is the one who does, your forward thinking and planning may ease their concerns during a very difficult time. How will you plan for your future?
This blog is up to date as of June 2024 and has not been updated for changes in the law, administration or current events.
