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.
Table of Contents
Why Millennials Avoid Life Insurance
Reason #1 – It’s Morbid and You’re Young and Healthy
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. 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 #2 – 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 kids or work.
Reason #3 – 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.
Before we dive into reasons to buy life insurance, let’s look at a few reasons to hold off on life insurance as a millennial.
Should Millennials Buy Life Insurance?
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, you’re probably okay. 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 it. 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 forego 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 a whole life policy as an investment, stop. 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.
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. And at your age, you can probably skip the medical exam and buy your policy online.
Another convenience of a term life policy for millennials is the flexibility it provides. 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.
Where You Should Buy Life Insurance
Knowing which life insurance company to pick can be tricky, but you’re ahead of the game with your newfound knowledge.
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.
If you do decide to purchase life insurance, you have a world of options. One of your best is a newcomer to the life insurance world, Ladder.
Ladder is the perfect provider for millennials as it offers instant coverage to young individuals in good health. You could have a policy in place in five minutes with affordable monthly premiums.
You simply complete a few questions on their website to find out if you’re instantly covered, need to undergo a medical exam, or are denied.
They’re also dynamic, meaning you can change the terms of your policy as your life changes, meaning you can increase your policy amount if you have kids to support or decrease when you pay off your student loans and other debts.
A ladder is flexible, hassle-free, and really affordable for young insurance shoppers.
Check out even more of the best life insurance companies in 2023, where you can find breakdowns of providers’ policies, quotes, and a term calculator.
Bestow Life has created another hassle-free option for millennials who need life insurance.
Shoppers in their 20s and 30s could have $1 million in term life coverage within 5 minutes if they qualify for Bestow’s no-exam policy.
If you’re a millennial who is healthy, your application should fall squarely into Bestow’s wheelhouse.
In fact, the company, founded in 2016, doesn’t always sell life insurance to older applicants, and Bestow sells only term life insurance which is the most affordable option.
Bestow’s 10- and 20-year policies can give you $1 million in coverage.
Once you’re a customer, Bestow has easy ways to manage your policy online.
How Much Life Insurance You Should Buy
Assuming you 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.
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.
How to Strategize Your Investment
Term life insurance is similar to renting a safety net. It covers the policyholder for a set period, typically 10, 20, or 30 years. If one foresees specific financial responsibilities in the short to medium term, like paying off a mortgage or ensuring kids’ education, term life is ideal. It’s affordable, straightforward, and offers peace of mind during life’s pivotal stages.
On the other hand, whole life insurance is a lifelong commitment that combines an insurance payout with an investment component. It accumulates cash value over time, which can be borrowed against or cashed out. It’s more expensive than term insurance but offers the assurance of a guaranteed payout and potential financial gains.
For millennials, the choice between term and whole life should be driven by individual goals, financial obligations, and risk appetite. Reflect on your current needs and future aspirations, and consult with financial experts to ensure your life insurance investment aligns seamlessly with your broader financial strategy.
Bottom Line: Millennial Life Insurance Guide
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!