A lot has been written about how today’s Millennials (usually defined as anyone born between 1980 and 1995) are putting off buying their first homes, getting married and starting families.
Another thing you can add to that list is buying life insurance. Research from the Life Insurance and Market Research Association (LIMRA) shows that while Millennials are concerned about their financial security, very few have enough (or even any) life insurance.
Why Millennials aren’t buying life insurance
Millennials cited “cost” as the main reason why they did not purchase life insurance. Many perceive life insurance to be more expensive than it really is. Millennials estimate that a $250,000 level-term life insurance policy for a healthy 30 -year-old is $1,000. In reality, it’s more along the lines of $150—practically 10 times less than they imagine.
The effects of the Great Recession only made Millennials less likely to shell out for a life insurance policy. And that’s unfortunate since there are many benefits to buying coverage when you’re young.
6 benefits of life insurance for Millennials
LIFE Happens, a nonprofit organization dedicated to helping consumers make smart insurance decisions, identified these benefits to taking out a policy as a young adult.
1. A way to provide for any dependents. Dependents often include children—but not always. A dependent is anyone who relies on your income to make ends meet. That could include a spouse, a live-in boyfriend/girlfriend with whom you own a house, a relative with special needs or a loved one whose long-term care you contribute to (or plan to contribute to). Keep in mind that even stay-at-home parents often have a need for life insurance.
2. Lower costs. Life insurance premiums are risk calculations based on mortality. Since average life expectancy is somewhere around age 79, there’s less risk for a company to insure a Millennial in good health. Coverage can usually be obtained for pennies on the dollar.
3. Insurability. Qualifying for coverage as a healthy Millennial is usually a lot easier and less expensive than applying after you’ve been diagnosed with a health condition. Don’t wait: A health issue can crop up overnight and qualifying for a life insurance policy can be a very different experience once you’ve been diagnosed.
4. A vehicle for maximizing your savings. If you always have a reason to dig into your savings, consider a permanent life insurance policy that has a death benefit and a savings component as well. You can borrow against it as well as use it in retirement, depending on the policy and the company behind it.
5. A supplement to 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 will no longer cover you. If you’ve been diagnosed with a terminal illness, you may not be able to secure a life insurance policy at that time. Plus, most basic coverage will not cover everything your family needs at a time when they are struggling to provide for themselves.
6. A means to cover funeral expenses and debt. Even if no one depends on your income, you should consider your debts and your burial expenses. The average funeral alone costs between $10,000 and $15,000. Some debts would be waived while others would be collected through whatever assets you left behind.
Also consider if your parents are cosigners on your student loan(s). If so, are they in a position to handle expenses like college loans 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 on the amount of insurance coverage they want. Erie Insurance has affordable policies with coverage up to $90,000 that require no medical exam.*
If you’re interested in learning more about life insurance, it’s best to talk with a professional like an Erie Insurance Agent in your community. He or she can tell you about affordable options that give you the right protection and peace of mind.
*Application may require answering questions about medical conditions.