As a millennial it’s easy for you to overlook intangible assets like life insurance when people your age are more into vacations, big homes, cars, and stuff like that. I mean you just got into the workforce, looking all young and healthy, what is the use of getting a life insurance cover at such an early stage? Isn’t it a waste of resources that would have otherwise been diverted to more fun?
The answer is a big no. In fact to protect everything you’ve worked for your entire life you need to buy life insurance. What happens if the worst case scenario hits, like say, you suddenly pass away or become seriously ill. Here are five reasons why you should consider life insurance as a millennial.
You are young – How this affects insurance
Insurance companies are experts in evaluating risks. So when calculating premiums for life insurance underwriters take your age as a primary factor. These premiums are cheaper when you are young because you are potentially a low risk asset to insurance companies and they get more expensive as you get older, especially if you are applying for a life insurance over 60. When you are young you end up landing on an affordable insurance policy since you will pay the premiums for a long time.
Similarly, being young means low number of health complications especially if your family history with illnesses is clean. And hopefully if you’re a non-smoker that would reduce the amount of life insurance premiums you pay too.
Dependents and life insurance
You may say you have no kiddos but think about how your sudden death would affect your spouse or significant other financially. Would you let them mourn their loss in peace or they would be double stressed about where to find funds to fill up the gap you’ve left in their lives. Medical bills, car payment, mortgage, and other household expenses can be so difficult for one person. Life insurance will help offset these costs when you die, and help your loved ones live normal lives.
Personal debts & cosigners
If you don’t have a student loan, you are a cool kid. But if you’re like most of us, student loan still haunts you in the early stages of your career. The loan together with accrued interest may not be a small amount to repay back.
In the event that you die, your cosigners who are most probably your parents, will be burdened by the debt you’ve left behind. And that’s after all they have gone through to put you through school. Life insurance will cover all your debts when you are faced with an untimely death.
Did you know that life insurance itself dates back to the Ancient Roman Empire times when soldiers formed their own burial club? Well, funerals can be a bit expensive ranging from $6000 to $14000, and we all deserve a proper send off. You may not be married yet but that’s still a substantial amount to burden your family and friends. Life insurance chips in to cover all these expenses and lift off the burden from your family.
Life insurance questions:
The basic difference between term and life insurance is that term insurance provides a death benefit in the event of death of the insured party within the period of the term, whereas a traditional life insurance policy offers both the death and maturity benefits to the insured. Term insurance plans provide a higher payout as the death benefit compared to traditional life insurance policies.
In the event that the insured party outlives their term life insurance policy, the funds paid into the policy are forfeit. Insurance companies use the premiums from individuals who do not pass away while their policies are valid to support the payouts to those who do.
Typically, most term life insurance policies do not expire, if they are upkept by the insured party, until that person has reached the age of 95. Existing policies may be kept in force by continuing to pay the life insurance premiums up to that age. Premiums may be reduced if the insured party takes actions to reduce health related risks.
Employers insurance may be inadequate
It’s a beautiful thing that your employer has secured a life insurance plan that covers you. Especially if you’re without your own family yet. But even so, doubling up with a separate life insurance policy might be a good idea, just to be on the safe side.
Because, who knows, you might lose your job anytime. Say the company was downsizing and unfortunately you get laid off, or you developed a serious illness and couldn’t work anymore. That would be the end to your employer’s policy. And that’s why you need a separate policy.
Make sure to check with the HR department in order to really understand the features that your employer’s life policy provides.
Also worth mentioning is that it’s important to check with the human resource department in order to really understand the features that the employer’s policy provides. This way you can tell if that’s enough to cover your financial needs, and also gives you the opportunity to understand the premium rates you pay through employer’s group life insurance. Then you can weigh which is cheaper between adding coverage to your employer’s policy and buying a separate one for yourself.
Conclusion about millennials and life insurance
Twenties and early thirties can be such a challenging phase full of financial uncertainty. But if you learn to be discipline with your finances at this young age, you will surely go places. And oh, did I mention that some life insurance policies can act as a savings plan? Like the endowment policy that lets you access your money after 15 years or so, based on the agreement.
Or even the whole life insurance policy that can allow you to borrow loans from financial institutions against your life savings. But that’s a topic for another day. It’s so beneficial to consider buying life insurance while you’re still young.