Lean in, millennials. This one’s for you.
I know no one wants to think about dying, especially dying young, but you need to.
Whether you’re 18 or rounding out the millennial bracket in your late 30s, it’s time to consider what financial state your parents, spouse, kids, or business would be in if you were to die unexpectedly today.
People like to give millennials a bad rap, accusing you of being blissfully ignorant of the harsh realities of life, but I know better.
In fact, I can see why millennials shy away from life insurance.
Life insurance isn’t always popular in the millennial crowd because it’s shrouded with misconceptions.
Let’s put those misconceptions to bed though, shall we?
Read on for everything you need to know about purchasing life insurance in your younger years.
Why Millennials Avoid Life Insurance
Reason #1 – It’s morbid.
When you’re young and in love, chasing your dreams, and living your best life, the last thing you want to think about is tragically dying before your time.
I get it.
Reason #2 – You’re young and healthy.
Along those lines, most of us don’t walk around with a cloud over our heads expecting death to come for us at any moment.
When you’re in your 20s, fit, and fabulous, it’s easy to assume you’ll stay that way.
Reason #3 – You’re busy.
You’re in the prime of your life and honestly haven’t put much thought into it, or you made a mental note to follow up tomorrow… a month ago.
It’s hard to prioritize a decision like purchasing life insurance amid all the chaos of classes or kids or work.
Reason #4 – It’s expensive.
Maybe you assume life insurance is out of your financial means.
While you might acknowledge it’s a worthwhile purchase, you can think of a lot more pressing places to put your money (Hello, college debt).
Chances are, you fall into one of the categories above.
Maybe you are young, healthy, busy, and strapped for cash, but those might be the very reasons you need to invest in life insurance.
Here are some truths for you:
- Life changes unexpectedly.
- Protecting your family should be a priority.
- Life insurance doesn’t have to be expensive.
- You can get life insurance on your terms.
What I say next might surprise you.
Not all millennials should buy life insurance.
Wait, isn’t this post supposed to convince me I do need life insurance?
I’ll get to that, but first, I’m going to share a few reasons to hold off on life insurance as a millennial.
Why Millennials Shouldn’t Get Life Insurance
This one is pretty straightforward.
If you’re healthy and meet the standards below, you could probably benefit more from placing your money elsewhere.
- If you’re on the younger end of the Millennial spectrum, your need for life insurance is less urgent than if you’re nearing 40. The older you get, the more your health declines, financial pressures increase, and families grow. The earlier in life you are, the less likely you are to actually need it.
- If you’re single and dependent, you don’t need to worry about insurance right now. Think of life insurance as a replacement for your income to sustain your family in your passing. If you don’t have a family to support, what’s the point?
- If you’re debt free, you can probably forego purchasing life insurance. No debt for you means no parents, spouses, or other cosigners will be burdened in the event of your passing.
- If you’re being enticed to buy an expensive whole life policy as an investment, slow your roll. There are plenty of surefire investment strategies with stellar returns that don’t dabble in life insurance. More on that later.
Why Millennials Should Buy Life Insurance
If the factors I just mentioned are reasons not to buy life insurance as a millennial, then their opposites are strong indicators you should.
Let’s take a little time to unpack the best reasons to purchase life insurance early in your life, and help make your decision easier.
- You have a family to protect. If you have a hubby or wife and want to ensure they’ll be taken care of, life insurance is a great investment. Likewise, if you want to know your kids are provided for and can attend college no matter what happens to you, insurance is 100% worth it.
- You’re in debt. College debt is the worst culprit for burdening millennials. Not all loans are forgiven if you die. If you’re still paying down a substantial amount, whether it’s an auto loan, an educational one, or any other type that can be transferred to your loved ones, you need to seriously consider life insurance.
- You’re an entrepreneur. If you started a business you’re passionate about and want to ensure its success no matter what happens to you, insure it! Life insurance can protect your business and keep it flowing without you.
- You want to save $ in the long term. As you’ll see in a minute, term life insurance premiums increase with every year you age. If you checked off some of the reasons I just mentioned and plan to purchase life insurance 10 years from now, you’ll save tremendously by starting today instead.
What Type of Life Insurance You Should Buy
I could spend thousands of words on all the types of life insurance on the market, but for your sake, I’ll keep it simple and tell you which one you should choose.
Life insurance basically boils down to two categories: whole and term.
With a whole life insurance policy, you’re covered for the rest of your life and get interest with your payout.
WIth a term life insurance policy, you purchase coverage for a certain amount of time, like 10, 15, 0r 30 years.
Although a whole life policy might sound more appealing based on that definition, it costs a pretty penny.
If you’re the average millennial with the needs I mentioned above, you’re far better off purchasing a cheap term policy.
They’re way more affordable and easier to purchase than ever.
And at your age, you can probably skip the medical exam and buy your policy online.
No dreaded drawn out phone calls necessary.
Another convenience of a term life policy for millennials is the flexibility.
Chances are you’re buying your life insurance with a pretty specific time or amount in mind, and there’s likely an affordable term there to meet your needs.
How Much Life Insurance You Should Buy
Assuming you do opt for term life insurance (good call!), you need to land on a term and amount to ensure you the coverage you need at a price you can afford.
And how much you buy will depend largely on your specific needs from the list above.
Say you’re 25, $150,000 in debt, and you anticipate you will be for the next 15 years.
If no one’s relying on your income, you’re in good health, and you’re just trying to protect people from your debts, you could be paying under $15 in premiums, maybe less than you spend on your streaming services each month.
I told you term life insurance was affordable!
What if you do have a young family at home depending on your income?
My advice is to multiply your income by 10x to determine your policy amount.
The terms are up to you, and once again, depend on your unique situation.
If you just want to make sure your kids are afforded the opportunity to go to college, calculate how many years away their secondary studies are and cap your term there.
Just take an honest look at your expenses, your income, and how people would be affected if you died in the next 10 years, or 15, or so on and so forth.
Where You Should Buy Life Insurance
Now let’s get down to business.
Knowing which life insurance company to pick can be tricky.
But you’re ahead of the game with your newfound knowledge, so put that information to work.
You don’t walk into a Best Buy with your blinders on and pick a TV at random (hopefully).
Big purchases warrant big preparation.
Assess your income, debt, and expenses, and go in with some terms and amounts in mind.
Insurance shopping can be a breeze; you don’t have to go through an agent, check long lists of insurance providers’ websites, or call them.
All you need is a free online term life insurance calculator, a few minutes, and some numbers to plug in.
Before you know it, you’ll have quotes for the cheapest premiums and highest payouts.
I’ve also done a little of the legwork for you, scouring the market to find and review the best life insurance companies in 2019, offering breakdowns of their policies, quotes, and a term calculator.
Check it out!
I know you’ve heard it a million times, but the financial decisions you make today will have a major impact on your finances in the future, and your loved ones.
Whether you’re a recent college grad up to your neck in student debt or a young parent hustling to secure your kid’s future, purchasing life insurance could be one of the best decisions you ever make.
And buying it today as opposed to a decade from now could make all the difference.
You’re at the perfect age to snag an affordable term life insurance plan to carry your family through whatever life brings, on your terms.
What are you waiting for?
Secure your future today!