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Do Millennials Need Life Insurance?

Do Millennials Need Life Insurance?

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The financial challenges millennials face can be overwhelming. Many young adults have to figure out how to pay off college loans, save to buy a home or start a family, and sock away money for retirement. Given these hurdles, it’s no wonder that life insurance as a financial asset gets little to no attention. But it should. There are many reasons to have life insurance at a relatively young age, but here are some common ones.

Leaving your debts for others to pay

As a young adult, you become more independent and self-sufficient. While you no longer depend on others for your financial well-being, your death might still create a financial hardship for those you leave behind. You may have debts such as a mortgage or student loans that are jointly held with another person. Or you may be paying your parents for loans they took out (e.g., PLUS loans) to help pay for your education. Your untimely death would leave others responsible for some or all of these debts. You might consider purchasing enough life insurance to cover your financial obligations so others don’t have to.

Funeral expenses can also be a burden for those you leave behind. Life insurance could ease the financial burden of paying for your uninsured medical bills (if any) and for costs associated with your funeral and burial.

It’s less expensive

Premiums for life insurance are based on many factors, including age and health. Certainly, the younger and presumably healthier you are, the less your coverage will cost. This is especially true if you are at a high risk for developing a medical condition later in life. However, 44 percent of Millennials overestimate the cost at five times the actual amount, according to a 2018 report by LIMRA.

Replacing lost income

Someone may be relying on your income for financial support. For instance, you may be providing for a family member such as a parent, grandparent, or sibling. In each of these instances, how would your income be replaced if you died? The death benefit from life insurance can help replace your income after you’re gone.

Providing for your family

As your family grows, so do your financial responsibilities. There is likely a hefty mortgage to pay. And there are costs associated with young children. If you died without life insurance, how would the mortgage get paid? Could your surviving spouse or partner cover the costs of day care and housekeeping?

And there are events you should plan for now that won’t happen until several years in the future. Maybe you’ll begin saving for your kids’ college education while trying to save as much as you can for your retirement. Over the next several decades, think about how much you could set aside for these expenses. If you are no longer around to make these contributions, life insurance can help fund these future expenditures.

Work coverage may not be enough

You may have a job with an employer that sponsors group life insurance. Hopefully, you take advantage of that program, but is it enough coverage to meet your needs now and in the future? Your insurance needs may change with time, although your employer’s coverage may not. Also, most employer-sponsored life insurance programs are effective only while you remain an employee. If you change jobs or are unable to work due to illness or disability, you may lose your employer’s coverage. That’s why it’s a good idea to consider buying your own life insurance.

why people don't have life insurance

4 Reasons Why People Don’t Have Life Insurance

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why people don't have life insurance

There’s nothing exciting about life insurance. But it’s not meant to get you hyped up. It’s meant to take care of you and your loved ones. Life insurance is designed to protect your income in the unfortunate event of your passing, whether too early or at a ripe old age. But who wants to think about that? We all love the idea of YOLO (You Only Live Once), but no one likes to think about that “only living once” is referencing the end.

This may produce the type of consumer who shies away from thinking that life insurance is a necessary option. Even worse, a consumer who purposely doesn’t think about it and develops inaccurate opinions about life insurance. Here are 4 reasons why people don’t have life insurance and why they’re not entirely understanding the truth behind a much-needed piece in their financial portfolio.

The Cost is Too High

The first mistake many people make is over-estimating the cost of life insurance for a variety of reasons — age, gender, pre-existing conditions, etc. — and that stems from not knowing the facts. 44% of Millennials estimate the annual cost for a 20-year term life insurance policy at $1000 a year. But, in reality, they could purchase one for around $165 a year.

There are Other Financial Priorities

Life insurance is about the unexpected. It’s natural for more tangible concerns to take precedence. Student loan debt, retirement planning, credit card debt, mortgage payments are all examples of more pressing money concerns. No one thinks about the unexpected, hence the definition of the term. As human beings we sometimes have tunnel vision to only perceive that which is in front of us.

Life Insurance is a different form of protection. It covers that which we cannot perceive. But it’s also not only about you, but what comes after you. Your loved ones. Those who you certainly do not want saddled with the debt you may leave behind. Purchasing life insurance is an important financial priority that you should not, and cannot, ignore.

Unsure of the Need

You’re never too young for life insurance. Much like planning for retirement, the earlier you start, the more financially protected you will be. Plus, your younger age will have you qualifying for lower premiums. If you develop health issues as you get older, there’s no longer a concern about getting life insurance at a higher price. You’re already covered.

You’re also never too old for life insurance. Policies may come with a higher premium, but you will be able to cover the costs of any debt you have incurred once you pass. Plus, any final expenses such as burial fees and estate closings will no longer be the responsibility of your loved ones.

Believe You Don’t Qualify

While the policies may be more expensive for those with pre-existing conditions, they still exist for the specific purpose to cover those with health issues such as diabetes. If you’re concerned about risk factors disqualifying you for life insurance, don’t consider that door closed to you. Talk with a financial professional about your options. Tailored life insurance plans are available.

need life insurance

9 Reasons You Need Life Insurance

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need life insurance

As a young person, life insurance may not be a pressing concern. With so much life ahead, saving and investing may not take precedence for you right now. However, it’s important to recognize that present choices profoundly impact your future financial security. Explore the significant advantages that life insurance can provide for the present and the years to come.

Understand the Misconceptions

Many misconceptions deter young people from realizing the value of life insurance. Life insurance offers numerous advantages for young people, including lower premiums and potential long-term savings. It secures your future, supports loved ones, and shields you against unexpected financial burdens.

Secure Financial Protection Early On

Starting a life insurance policy in your 20s brings undeniable benefits. Young age and better health translate to lower premiums, enabling you to lock in long-term affordable rates. Acting early saves significantly compared to waiting until later when premiums rise due to increased risk.

Safeguard Your Loved Ones

Life insurance offers crucial financial protection for your loved ones in the face of an untimely death. Imagine the burden on your parents, siblings, or other family members left to handle outstanding debts. Funeral expenses are overwhelming and emotionally distressing. Additionally, the loss of your income could destabilize their financial security.

Plan for Future Responsibilities

Consider future responsibilities such as marriage, parenthood, or co-ownership of assets in your 20s. Life insurance can secure your financial stability during significant life milestones. It provides a safety net for your spouse and children, ensuring their protection in case of the unexpected. Moreover, it safeguards shared assets, guaranteeing financial security for your loved ones and preserving the legacy you have worked hard to build.

Student Loan and Debt Management

The burden of student loan debt weighs heavily on many young adults. In the unfortunate event of the insured’s passing, cosigners or family members become responsible for the remaining loan balance. Life insurance can alleviate this strain through the death benefit, which pays off the outstanding student loans, sparing loved ones from inheriting the debt.

Furthermore, life insurance is a valuable tool for debt management and protection. You can use it strategically to create a safety net for various financial obligations, including credit card debt, mortgage loans, or personal loans. In the case of shared debts or joint ventures, the death benefit can settle outstanding balances, preventing financial hardships for the surviving parties.

Lock in Affordable Rates and Coverage

“Insurability” refers to an individual’s eligibility for life insurance based on age and health. Obtaining coverage becomes more challenging and expensive as you age or develop health conditions. Take advantage of your youth and seize the opportunity to secure life insurance now. Your impeccable health affords you affordable rates and comprehensive coverage for the future.

Build Cash Value and Future Flexibility

Cash value is a savings component included in some permanent life insurance policies. It works as an insurance and investment tool. As you pay your premiums, a portion contributes to the death benefit, and the remainder builds the cash value. The savings grow tax-deferred and are accessible during your lifetime. You can use the funds for a home purchase, cover education expenses, or supplement retirement income.

Living Benefits and Riders

Life insurance riders like critical illness or long-term care provide added security beyond traditional coverage. For instance, critical illness riders offer a lump sum payout upon a severe medical condition diagnosis, helping cover treatment expenses. Long-term care riders provide financial assistance for extended care needs, ensuring comprehensive protection for any health challenges that may arise.

Peace of Mind and Emotional Well-Being

Life insurance’s true worth lies in the intangible benefits it brings. It grants peace of mind and lessens anxiety about the unknown future. The emotional well-being it provides is immeasurable. It assures you that your loved ones will be financially secure even in your absence.

Choosing a Life Insurance Provider

7 Tips for Choosing a Life Insurance Provider

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Choosing a Life Insurance Provider

There’s no greater motivation for putting a protection plan in place than for those you love. Among the decisions you need to make when buying life insurance is what company to choose. Here are some tips to help you find the right insurance company for you, your family, and your situation.

Price matters, but it’s not the most important factor

Often, a straight price comparison can cause you to overlook the underlying features of a policy, such as cash value guarantees and return of premium features, that can be of real value over time.

Price quotes may change, so get several of them

Initial price quotes often change after your personal and health information has been assessed. Make sure you get multiple price quotes, so you have choices should some of the final price quotes come back much higher than expected.

Find companies that are financially strong

You want to work with a company that will be around when it’s time to pay the death benefit on the policy. There are a number of independent rating firms, such as Fitch Ratings, Moody’s, A.M. Best Company, and Standard & Poor’s, that issue grades for insurance companies. Additionally, life insurance companies will generally post their ratings on their website. Each rating firm has a different scale, but generally you want to look for a rating in the A range.

Evaluate each company’s menu of offerings

Although many companies sell similar polices, some focus on certain products (i.e. whole life), certain market segments (i.e. seniors, young professionals), or specific careers (i.e. medical professionals).

Look at customer satisfaction scores

You want to work with a company that is going to provide good service and support. One way to gauge an insurer’s reputation is through complaints filed with state regulators. You can access them on the National Association of Insurance Commissioners website. The National Association of Insurance Commissioners is an industry association dedicated to protecting consumers and ensuring fair, competitive, and healthy insurance markets.

Consider using a mutual company

Unlike publicly traded insurance companies which are owned by stockholders, mutual life insurance companies exist to serve the insurance needs of their policyholders who may share in the profits in the form of policy dividends.

Leverage life insurance experts

There are many financial advisors who specialize in life insurance. They have not only an in-depth knowledge of all the various policies available but also access to a wide range of carriers, and they can do the work of matching you with the company and policy that best suits your needs.

We hope you find this list helpful and consider using it as a catalyst to either purchasing life insurance for the first time or reevaluating the coverage you currently have to ensure it still meets your protection needs.

We leave you with a few words of wisdom from LIAM Spokeswoman Kelly Rowland: “Having life insurance truly eases my heart and mind. It means that no matter what, my family can keep looking toward the future.”

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