Millennials live in an innovation-driven economy moving faster than any other generation. We can’t predict the future, but we can prepare and manage it with life insurance. It serves several purposes — all intended to build, provide for and protect the future financially.
Buying life insurance during early adult years offers several advantages. It’s likely that many haven’t a clue how life insurance works. And even fewer realize life insurance is an investment of themselves to be used against whatever life throws in their path — making the age of twenties and thirties ideal to purchase a life insurance policy.
Reason 1: Life Phasing Polices
As millennials focus on seizing new opportunities for education and careers — there’s little interest in life insurance. Granted most see life insurance as a method of paying debt in the event of a life tragedy or family misfortune.
It’s really about managing change accompanied with financial responsibilities.
Reason 2: Employer’s Insurance
Millennial or not, it's important to take the time to read your employee benefits. Take a close look at the features offered in the life insurance policy and ask questions if you're unsure about anything. Most employers will not offer a standard plan with an option for additional coverage but the majority of companies have limited coverage.
In the event an injury prevents you from working — an employer’s policy may not cover your financial needs. In this case, you may need to secure independent coverage. In addition, having independent coverage will provide you with uninterrupted protection should the employer go out of business, you change jobs, or you get laid off.
Reason 3: Cost and Benefits
Premiums are calculated on the applicant’s age. A good health status translates into less risk, which typically reduces the premium.
If you are suffering from a health disorder, it’s a good idea to talk with an agent and get specific information on the features you need or should consider in the future. If diagnosed down the road with a serious health condition, the policy remains active.
Reason 4: Know Your Needs
Determine how much coverage you need. Do research on types of policies along with an insurer and look for the insurer’s rating. It’s an industry rating, verifying the financial strength and the ability to pay the policy claims.
Life is full of surprises for young adults and their children, some of which can cause serious injuries. So it's also important to ask about riders for long-term healthcare or disabilities. These policies can help cover the financial expenses.
Reason 5: Take Care of Business
As you accumulate assets and begin to raise your family it’s essential to secure a backup plan using the life insurance features for paying day-to-day bills for childcare and family expenses. It’s an affordable method of providing for your family when you can’t.
- Choose between the two major types of life insurance: term or whole life.
- Term insurance pays a death benefit (sole provision) as long as the policy is in force whereas term policies can range up to 30 years.
- Whole life pays a death benefit and offers three plans — traditional whole life, universal life, and variable universal life.
Reason 6: Plan, Plan and More Planning
Most of us know about life insurance payouts for injuries, death, and beneficiaries. Whole life policies also have a savings program — earning interest and building equity. Provisions vary from company to company. It’s worth the time to learn about this component. Portions of the policy earnings are tax-free, accumulating a cash-value over time.
With a sufficient cash value, you can borrow against it or use it to pay the insurance premium during early retirement, keeping the policy intact. This is a valuable financial resource for young adults.
There are so many unanswered questions about life. Talk with an experienced agent or financial advisor to get the answers to your questions. Life insurance provides peace of mind and comfort by taking care of your family.
Information has been obtained from a variety of sources which are believed to be accurate though not guaranteed. Past performance does not indicate future performance. This paper does not represent a specific investment recommendation. Please consult with your advisor, attorney, and accountant, as appropriate, regarding specific advice.