6 Reasons Millennials Should Buy Life Insurance
Millennials live in an innovation-driven economy that is moving faster than in any other generation. We can't predict the future, but we can prepare for and manage it with life insurance. Life insurance serves several purposes, all intended to build, provide for, and protect the future financially.
Buying life insurance during the early adult years offers several advantages. However, it's likely that many haven't a clue how life insurance works, and even fewer realize that life insurance is an investment for themselves to be used against whatever life throws in their path, making the age of the 20s and 30s ideal for purchasing a life insurance policy.
Reason 1: Life Phasing Polices
Even as millennials focus on seizing new opportunities for education and careers, there seems to be little interest in life insurance. Most see life insurance as a method of paying debt in the event of a life tragedy or family misfortune. But it's really about managing change accompanied by 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 by 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 you are 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 the types of policies available along with an insurer. Be sure to look for the insurer's rating, which is an industry rating that measures the insurer's financial strength and ability to pay the policy claims.
Life is full of surprises for young adults, 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 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 professional to get the answers to your questions. Life insurance provides peace of mind and comfort by taking care of your family.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.