Life insurance costs the same as a streaming service subscription, yet many millennials either don’t have life insurance or don’t have enough coverage.
“This is not necessarily on the radar for the majority of millennials,” says Erika George, director at National Life Group, and a millennial herself. “Think about the competing priorities millennials are faced with such as student debt and rising costs of living, etc. Yet, it’s best to get life insurance when time is on your side and you are young and healthy.”
What you should know
It’s important to know the difference between term life insurance and permanent life insurance. Term provides a death benefit for a specified period of time, such as 10 or 20 years. Some term policies can be extended after the term, but typically at much higher costs. The death benefit is only paid if the insured dies while the policy is in effect.
Permanent life insurance continues for the life of the insured person, as long as all premiums are paid. Plus, it has the potential to build cash value that the policy owner can access during their lifetime via policy loans and withdrawals. But it doesn’t stop there, some types of life insurance include living benefits. These additional benefits allow the consumer to access the death benefit of their policy during their lifetime for additional financial help — in the event they are diagnosed with a serious illness.
Priorities
Six in 10 people reported not buying life insurance because they said they have other financial priorities. That’s according to the 2018 Insurance Barometer Study by LIMRA of 2,082 individuals, including millennials.
But managing those “other financial priorities” after a loved one’s death would be challenging without life insurance. That same survey found 35 percent of all households said they would feel adverse financial impacts within one month of a primary wage earner’s death.
“Life insurance should just be one of those things you budget for,” says Faisa Stafford, president of Life Happens, who calls it more affordable than people think.
“Millennials overestimate the cost of life insurance,” she says, explaining 42 percent of millennials surveyed thought that a $250,000 life insurance policy for a 30-year-old was over $1,000. It’s actually $160 per year.
The process can be easy too. In many cases, with simplified underwriting, many consumers can qualify without doctors’ visits or lab work.
Buy it now
It’s smart to buy life insurance when you are younger, in order to lock in your insurability. The longer you wait, the more expensive it can get and you may not be eligible due to health reasons.
“We spend so much time planning for that dream vacation or wedding, our first home, and so on,” says Colleen Tuohy, principal industry consultant at Hearsay Systems. “Oftentimes we don’t adequately prepare for the ‘unexpected.’”
Don’t rely on a crowdsourced fundraiser like a GoFundMe to help your family pay for your final expenses. With life insurance, you’re helping your family stress less over current and future expenses.
Tuohy urges millennials to take a protection-first approach and is encouraged that 6 in 10 millennials say they’ll consult a financial professional and the internet for information on individual insurance products, according to the 2018 Insurance Barometer Study.
Looks like the old ideas about life insurance may be changing just in time for the millennial generation.
National Life Group® is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest, Addison, TX and their affiliates. Each company of National Life Group is solely responsible for its own financial condition and contractual obligations. Life Insurance Company of the Southwest is not an authorized insurer in New York and does not conduct insurance business in New York.
Living benefits are provided by no-additional premium accelerated benefit riders. Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event, may affect your eligibility for public assistance programs, and may reduce or eliminate other policy and rider benefits. Please consult your personal tax advisor to determine the tax status of any benefits paid under this rider and with social service agencies concerning how receipt of such a payment will affect you. Riders are supplemental benefits that can be added to a life insurance policy and are not suitable unless you also have a need for life insurance. Riders are optional, may require additional premium and may not be available in all states or on all products.
Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event. Surrender charges may reduce the policy’s cash value in early years.