Is there any need of life insurance for millennials? – the question has been a talk of the net of late.
Let’s see what is there in the cup.
If you were born between 1980 and 1994, you belong to the generation popularly known as the Millennials, Generation-Y or, Gen Next. That is to say, you are now within the 28-37 age bracket, the most importantly formative period for your life as well as finance.
Statistically speaking, as Wikipedia mentions, men in the USA marry at the average age of 29.2 while women go into wedlock at age 27.1.
So, if you are a man in the lower end, you are hypothetically preparing to make your own family. And, if you are in the latter end, you presumably have already become a father of one or two.
On the other hand, if you are a woman in the lower end, you should have married by now and have probably gotten your kids, already going to school.
Again, if you are between 23 and 27 and belong to the younger group of the Millennials, you are presumably preparing to start life in a new perspective soon.
The question is whether you are making any mistake if you are not buying or thinking of life insurance.
Let’s Check the Facts
Life Happens and LIMRA’s (respectively a life insurance awareness platform and a market research organization) joint studies show millennials are less interested in life insurance.
Nearly half of them (as of 2017, 52%) are without any kind of life insurance protection.
One-fifth or 80% of the generation say they have priorities other than life insurance.
61% of them say their priorities involve day-to-day expenses like groceries, electric bills, rents, mortgages etc.
57% identified bills of internet providers, cable lines or mobile phones as more important issues than life insurance.
38% of the study participants prioritized purposes like visiting restaurants, watching movies or shopping over life insurance.
23% of the youths said vacationing was more important to them than wasting money on life insurance.
This situation has raised the question whether life insurance for millennials is necessary or not.
Investigations show while millennials should not neglect life insurance, they are avoiding it more for their lack in the knowledge of the matter than anything else.
For example, the same Life Insurance Barometer Study shows that most of the millennials cater to misunderstood ideas about life insurance rates.
73% of them have an exaggerated view of the rates that leads them to think they cannot afford it.
40% of the youths presume life insurance to be 5 times more expensive than it really costs.
42% of them assume that they will not qualify for insurance.
The study also brought out some surprising facts.
Nearly 50% of the Millennials said they did not buy life insurance because no one approached with the issue to them.
52% of them said they did not like to think about death; and,
58% of them said they had not gotten around to it.
Life insurance for Millennials has remained to be full of…
And mistaken ideas and attitudes.
And, they stand in the way of your purchasing life insurance which could be part of a prudent financial planning for you.
7 Solid Reason for Life Insurance for Millennials
Reason No. 1
As a matter of fact, however optimistic you may sound to be not thinking about death, it can be abrupt and intrusive. There is little logic for denying this fundamental aspect of life. You should practically think of how an accident could impact the future of your spouse, children and whoever depend on your income. There should be some arrangement for supplemental financial channel for them so that an accident may not affect their living. Life insurance is the only guaranteed program that they might need to live on.
Reason No. 2
Even if your spouse is on a payroll, you cannot deny life insurance especially when you have kids. It is significantly needful when your kids still have many years ahead to continue education and the list of your inherited assets is not lengthy enough. As a rule of thumb, two-way income families face more difficulties when one of the spouses dies off and cuts the family budgets to a half.
Reason No 3
Though you often associate life insurance with death, it is neither always, nor necessarily death-centered. Aside from providing death benefits, life insurance also supplies living benefits. Simultaneously, you can invest your money for growth and keep the dependents secure by choosing the right kind of policy. You can do so by purchasing a whole life insurance policy. So, you can very well think of life insurance as a useful tool for savings as well as investment.
Reason No. 4
Life insurance for millennials could be of especial use when you have mortgaged assets. Your home or car loan are examples for which life insurance is worth consideration for you. In the event of you passing on suddenly, the dues you owe to the lender will go to your family members. Having life insurance back-up is useful when you know you owe and admit to the fact that life can be uncertain.
Reason No. 5
Life insurance for millennials is well-justified when someone else (presumably your parents) has co-signed on your outstanding student loan documents. Though student and some other loans have waivers on the death of the loanee, the rule goes void when you have a co-signee. This is applicable to some loans other than student loans too. Thus, you can save your loan co-signees from the burden that may fall on them behind you.
Reason No. 6
A big reason in favor of life insurance for millennials is to save your family members from shouldering the loads of final expenses that sudden death usually leaves. Believe it or not statistics shows that the burial costs can range between $10,000 to $20,000 or even more.
Reason No. 7
The yet another argument in support of life insurance for millennials is that it stands supplementary to your employer-sponsored insurance. Employer-sponsored insurance has its limitations. On one hand, your insurance coverage is typically so small in size that it often fails to supplement cut-off income when you are no more. On the other hand, unless you are on-the-job status for illness or the like reasons, you will not be eligible for the coverage. So, purchasing a life insurance policy on your own can be a wise decision for you family’s future.
When Millennials Should Buy Life Insurance
So, what is the best time for millennials to take out life insurance?
A one-word answer to your question can be – now.
The best time to purchase life insurance for millennials should be the soonest possible time. You should go for it well before your next birthday celebration. And, this is no hypothetical proposition.
The reason is, your life insurance rate goes up along with your age. Every anniversary takes the barometer of your policy’s rate to a higher level. You should even avoid time around your next birthday because insurers will then typically (instead of counting your current age) count your nearest age and rate accordingly. So, the rule of thumb is, the later you buy, the more you pay. Unless you are ready to pay more, now is the time for you to take out your life insurance policy.
Another reason for buying life insurance sooner is your fitness. Fitness is a great factor that helps you qualify for life insurance. As a matter of course, you may not be fit the same way in future that you are now. If, for some reason, your health status changes for bad or worse, you may not qualify for insurance. It is good for you to know that while some issues will leave you ineligible for purchase of insurance, others will make your rate steeping high. So, you see, even if you qualify, you will end up paying penalty that comes with higher rates.
The Best Buy for Millennials
Purchasing life insurance for millennials should be no less strategic than it is for their seniors. Viewing it as part of financial planning can be worthwhile for you. As a member of the millennial community you need to choose the right policy from among the various types of life insurance that will come to you.
While most financial masters will suggest that you take out term insurance and keep away part of your income for savings, others will probably recommend whole insurance. As to which of the schools is best depends on the way you look at your financial strategy.
Term life insurance for millennials is good so long as you care only about your sudden death within specific years. That means when you are worried that your death within certain time ahead could prove fatal for your family’s protection, you can very well go for it.
But Michael Dinich , noted financial strategist based in Sayre, Pennsylvania and Advisor to Your Money Matters says, “An indexed universal life policy can provide a cost-effective death benefit to protect loved ones. Additionally, IUL can be used to accumulate money safely and on a tax-advantaged basis.”
As to why unlike most others, he defends indexed universal whole insurance out of the spectrum and especially over term insurance, Dinich explains, “For younger people Indexed universal life may not cost much more than term insurance. Term insurance costs more each time the term is renewed and if the policy is continually renewed eventually the cost will exceed your cost of IUL.”
Let’s see what the two type of insurance means
Term Life Insurance
Term or term life insurance is a time-bound plan. You can buy it in different company-defined durations like one year, 5 years, 10 years, 15 years, 20 years, 25 years or 30 years. There are policies for 35 or 40 years as well but rare. You can choose the duration that suits to your need.
Term insurance is an only death benefit policy. If you die off within the policy duration, your nominees get the lump sum of money that you sign the policy for. It is especially useful when you have worries about financial protection of your dependents behind you.
Term life insurance is well-advocated because it is cheap beyond the popular imagination and the protection is guaranteed. Also, its rate does not go up for the duration you buy the policy for.
Indexed Universal Life Insurance
Indexed universal life insurance policy is a permanent type of life insurance policy that protects you so long as you live and provides you the benefit of cash value. No matter when you die, the beneficiaries will get the benefit and be able to pay not only for your funeral expenses but also have the death benefit as a legacy. Being of whole genre, IUL works as an investment tool and its biggest benefits are you can suit the death benefit and premiums to your situation and need. Flexibility is, in fact, the core to this policy.
However, the profitability part of IUL should be well investigated into. This is why Life Insurance Mentors team recommend that you be aware of both its pros and cons before making a decision.
Finally, you cannot ignore the need of life insurance for millennials.
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