Life Insurance for Millennials
If you are a millennial right now, you probably have some expenses that may have you wondering if you can afford to add life insurance premiums to your monthly budget.
As a millennial, you are probably still busy repaying your student loan and have probably considered purchasing your first home or already have a mortgage on your first home. Perhaps you even have a child or are expecting one soon. These RESPonsibilities do place an extra financial burden on an already tight budget, but it is unwise not to think about life insurance right now.
It is understandable that you might be putting off considering and purchasing insurance for yourself, after all, no one wakes up in the morning, deciding that they need insurance.
It is now 2021, we are in the age of information and knowledge. It is important for you to start learning and gathering information about what life insurance is and why certified financial advisorss preach that you need to have it.
Importance of Insurance for Millennials
From the moment you have people depending on you financially or who may have to bear the burden of your debt if something were to happen to you, then you definitely need life insurance.
The monthly premiums of life insurance coverage allow your beneficiary to receive the death benefit of your policy. This is paid out in a tax-free lump sum, and the money will help them cover certain expenses that you would have paid if you were still alive.
If you are an employee in a large corporation, your employer probably pays the life insurance premium for you, however, the coverage is usually limited to one or two years of your salary and be careful because your employer can cancel the policy at any time, should the company faces financial difficulties.
For those of you who are still single and have no dependents, this is usually enough for the time being, however, there are a lot of factors that you will want to be careful about when you considering leaving your insurance needs with your employer. Keep in mind that when you leave your position, the majority of group life insurance policies will expire and you will not be able to carry on the policy even if you pay the premium. Therefore pay attention to the fine prints of your policy and ask your human resources or employer.
You might ask, why is that important and that is typical of a millennial to ask. The answer lies with the fact that your health condition and situation change as you age and if the change is drastic, this might make you uninsurable, which means you will no longer be able to obtain life insurance. Getting insurance from a young age will give you the ability to keep your insurability even if your health condition changes (ensure that your policy has the renewability clause)
If your only source of insurance is your employer and you leave your job, in the event that your health condition has changed, not only you will use your coverage, you might not be able to obtain insurance anymore. You will be left without protection.
Now the above was in a condition in which you don’t have family and liabilities. If you have a family or you starting a family, the amount covered by your employer’s life insurance will surely not be enough to adequately cover you and your family for paying costs such as a mortgage or rental costs, living expenses, school tuition, and etc.
As a millennial, you are young and healthy, this is the best opportunity for you to purchase life insurance coverage in order to essentially what we call “locking your insurability”. This way as your family and liabilities grow, you do not need to be worried about what happens in case of your premature death.
What Types of Life Insurance are Most Suitable for Millennials?
The two types of life insurance options are term life and permanent life. The two have substantial differences, and according to your personal circumstance, you need to opt for one above the other. Typically, your financial advisor considers a variety of different factors when recommending whether or not you need to go with term or permanent life insurance.
Term life insurance
With term life insurance, you can choose how many years you want to insure your life, essentially this is the number of yours you will be managing the financial risk of death for your family. You can opt for any number of years, but the most common terms are 10, 20, or 30. Your premiums are paid during the term, and if you die your beneficiary receives the death benefit.
As the name suggests, the policy will protect you for a set number of years. This type of policy is best when you are considering protecting a liability such as a mortgage or when you have a young child. The implication is that a liability like a mortgage will decrease as you pay off your mortgage, therefore, you will match your life insurance term with the term of your mortgage which is typically either 25 or 30 years.
After the term expires, you pay no more premiums and your beneficiary also receives nothing. If your term insurance is renewable, you will have the option to renew your insurance for another term at a predetermined rate and without any proof of insurability.
Term life insurance premiums are very affordable and young Canadians opt for this option because they only want life insurance for as long as they have dependents or debts. However, you must keep in mind that term insurance is not the solution to every situation.
Permanent life insurance
On the other side of term insurance, there is permanent life insurance which comes in three forms: Term 100, Whole Life, and universal life insurance. Each of the three options has a different purpose and you need to study in order to decide which type of life insurance you need.
Permanent life insurance is the solution that covers you for the rest of your life. When you choose permanent life insurance, you pay a premium for the rest of your life, and your beneficiary is paid out no matter when you die. In exchange for ensuring permanent cover, the premiums are higher.
Keep in mind, that you could also obtain convertible term life insurance that allows converting into permanent policy during the term of the coverage but not all policies allow this conversion, therefore pay attention to the features of your policy.
What to Consider When Looking for Life Insurance
Finding the best life insurance is not difficult, but these are the things you need to consider:
Choose a financially strong insurer
Most insurance companies in Canada are financially strong because of the tightly regulated insurance industry in the country. The following are the most important factors to consider when selecting an insurance company:
- Consumer Protection
- Rating Servies such as A.M Best Canada Ltd
- Continuing Customer Care
- Fees
- Commitment to Service
Look for the best rates
Cheaper insurance does not mean you will be getting fewer features. Insurance companies usually offer lower prices to attract you as a customer. However, do compare features and ensure the features of the policy (renewability for example) is in line with your needs.
Insurance rates can rise if you have a pre-existing medical condition (e.g. hereditary heart condition, diabetes, etc.). If you do have a pre-existing condition, you will need to shop around a bit more to ensure you get the best rate possible.
Approval times and document deliveries
Some insurers take time to process applications and approve them because they still rely on postal services and physical paperwork. If you don’t want to wait long, then choose a company that accepts electronic applications. These companies also deliver your policy electronically, meaning that you will have a valid life insurance policy in no time.
How Much Can a Millennial Expect to Pay for Term Life?
The rates vary according to the coverage value and age, but term life insurance is very affordable for millennials. In a quick survey of some of the best Canadian insurance companies, we found that an average 30-year-old millennial male will pay a monthly premium of between $17.00 and $22.28. For women millennials, the monthly premiums are less and range between $13.50 and $18.00. These rates are for a 20-year policy with a coverage of $250.000.
These are affordable prices, especially since a life insurance policy affords you and your family peace of mind.
How to Obtain Life Insurance with AplusWealth?
The process of purchasing life insurance from Apluswealth is designed to be super easy, online, and fast. If you know what type and amount of coverage you are looking to get, simply get your quote using our software and then click apply online. However, if you require assistance from our expert advisors, we will set up an online or in-person meeting with you to go over your needs analysis and assist you with you making your decision.
Depending on the amount of coverage and the life insurance provider you have chosen, you may or may not be required to complete a medical examination. Once the medical examination and the underwriting process are completed, you will be offered your insurance coverage and the process is completed. Start covering your family from today.
Email: Contact@apluswealth.com
Tel: 1-888-461-6120