Before Buying Life Insurance – What Millennials Need to Know
Millennials are between the ages of 21 to 39. They comprise the workplace ratio of employees. It is millennials who are driving technology and are more flexible as freelance workers. They are more flexible in their daily lives as they work and play with skillful ease. Financial and future growth is important to millennials.
The COVID-19 pandemic has certainly placed end-of-life scenarios first on everyone’s mind. Millennials are no exception. Life insurance plans are a beneficial investment. Investing early for millennials is important and rewarding as the Apple earnings date identifies.
In looking for assistance in securing a life insurance policy, there are things that millennials need to know beforehand. Let’s look at five things to help millennials traverse the must-know details of life insurance.
1. What Type of Plan Do You Need?
Let us start by informing millennials that there are several different life insurance plans. The different life insurance policy plans include variable universal life insurance, term life, whole life, and universal life.
- Whole Life Insurance: Whole-life insurance can act as a savings account which is a great plan for the future. You accumulate cash value and interest that can be used in the future. Millennials can take out loans against their cash value. There are no stipulations for the loan, and it can be paid back at the will of the policy owner. Also, beneficiaries are always protected which works for estate and trust planning
- Term Life Insurance: Term life insurance is the least expensive of policies. Its name is applicable because it provides insurance for a certain number of years. If you outlive your term policy then you receive all or a large portion of premiums already paid. Other benefits include the ability to convert it to whole life insurance
- Index Universal Life Insurance: Index Universal Life Insurance policies carry a cash-value account. Any extra money paid into the policy can be added to its cash value. What this means for millennials is that the more they invest in the policy early in life, when insurance costs rise, millennials are more prepared with a highly invested cash value. The cash value can then be used for extra cash.
- Variable Universal Life Insurance: A variable universal life insurance policy also has cash value built in but in the form of mutual funds. Millennial policy owners can choose which cash value program to invest in. If the market does well, then so does the variable universal life mutual funds. This type of policy also allows millennials to apply for loans
2. Life Insurance Is Not Expensive
In saving for the future, millennials should buy life insurance now while it is less expensive to purchase. The policy premiums for millennials in their 20s and 30s are less expensive for the same coverage you will receive as you age. Insurance companies know that at a younger age, you have not developed any pre-existing health conditions. Buying a policy now will allow millennials to pay a lower premium for the length of their insurance plan.
3. Life Insurance Death Benefits
Millennials are taking notice that COVID-19 presents a harsh reality when thinking about life and death. If you carry life insurance at this time of life, it will help pay the funeral costs which today amounts to over $8,000. Without a form of life insurance, your loved ones would be left with trying to pay for services. A simple life insurance policy will lessen expenses for your loved ones.
4. Loss of Income Benefits
Unfortunately, many millennials are finding themselves and their family out of work during this global pandemic. Life insurance provides savings to help reinforce finances. As you go through life, getting married, having children, and accumulating debt, the need for life insurance programs makes better sense. A life insurance plan will help pay off debts and provide some financial stability caused by the loss of an income.
5. Employer Life Insurance
Millennials consider the life insurance plan provided by their employers a great benefit. However, most companies only provide 1-3 times your annual income in life insurance coverage – is that enough? Perhaps not. As a millennial, you will probably need 80% of your life insurance cost to ensure that your needs are met. Today’s health issues have millennials addressing financial issues like death, how to pay mortgages, and how to provide for the family if income is lost. Therefore, it is best to have an individual policy outside of work with the right amount of coverage.