Research from the Life Insurance and Market Research Association (LIMRA) shows that while Millennials (anyone born between 1980 and 1995) 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.
Take a look at the 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. 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.
Erie Family Life Insurance Company offers an optional rider that lets you take the protection you qualify for now into the future, enabling you to increase your coverage as life progresses.
The Guaranteed Insurability Option rider1 makes it possible for you to purchase additional insurance later, even if circumstances deem you “uninsurable.” So if you add the Guaranteed Insurability Option rider to your policy, the death benefit can be increased when your needs change but you won’t have to answer medical underwriting questions.
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. 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.
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 you can borrow against or use in retirement (depending on the policy and the company behind it.)2
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 may 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 can cost as much as $9,000. Some debts may 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 your local ERIE Agent. He or she can answer your questions about life insurance and offer affordable options that give you the right protection and peace of mind.
ERIE® life insurance products and services are provided by Erie Family Life Insurance Company (home office: Erie, Pennsylvania) and are not available in New York. Additional terms, conditions, exclusions, licensure and territory information are available here. The insurance products and rates described in this article are in effect as of September 2018 and may be changed at any time. Eligibility for insurance coverage will be determined at the time of application, based upon applicable underwriting guidelines and rules in effect at that time. Application may require answering questions about medical conditions.
Life Happens is a nonprofit organization dedicated to helping consumers take personal financial responsibility through the ownership of life insurance and related products. Life Happens Pro furthers its mission of educating the public by making its resources customizable and putting them directly into the hands of agents. This organization is not owned by or affiliated with Erie Family Life Insurance Company.
1 Guaranteed Insurability Option is subject to underwriting approval and is not available with all plans. Issue ages 0-40. See an ERIE agent for rider specifics, availability, terms and conditions. Additional cost applies.
2 The death benefit may be reduced or eliminated if account value is reduced by withdrawal, loan or failure to pay premiums.