Young individuals, especially Millennials, are more money-savvy than most people want to believe. Not only do they manage to save money monthly, but they are also very interested in managing risks properly. The 2018 annual LIMRA Insurance Barometer Study showed that more than Boomers or Gen X, two out of five Millenials want their partner to have higher life insurance coverage. Additionally, the study showed that 54% had researched types of life insurance and costs online.
In the 2021 study, nearly 50% of Millennials said that COVID influenced them to start thinking about purchasing life insurance and being prepared in case of sudden death.
Worrying About Managing Finances
Two recent crises have made Millennials more cautious with money. These include the 2007 financial crisis caused by the collapse of the U.S. housing market and the effects of the COVID-19 lockdowns.
Canada felt the effects of the 2007 crisis less than Europe, but it caused a drop in employment thanks to the declining output. Despite being younger at the time, Millennials saw how their parents struggled to overcome the effects of the stricter measures introduced by Canadian policymakers.
The pandemic also changed how younger people think about life insurance. Insurance companies saw one of the most significant increases in sales since 1983, as consumers sought to protect their families if they should pass away suddenly. Additionally, people younger than 44 form one of the most substantial growth segments in the insurance market.
Buying Affordable Insurance Policies
Unfortunately, despite their interest in life insurance, young people must consider other responsibilities first, so most are still researching the best life insurance. Their financial priorities include paying their rent, utilities, student loans, and credit card debt. Besides these expenses, they must also make retirement, healthcare, and vacation provisions.
However, despite their conscientious spending decisions, younger people often hold back from buying insurance because they think it is expensive. Interestingly, the average death benefit is shrinking as younger people buy more affordable policies.
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Reasons Why Younger People Need Life Insurance
Primary wage earners of every age need to consider life insurance. The two main types of life insurance are term and permanent, where the policyholder either sets the number of years for its expiration or pays for it over their whole lifetime.
Here are some reasons why younger people should get life insurance:
1. Lower Premiums
Young people are healthier, meaning they qualify for lower, more affordable life insurance premiums. For example, a 30-year-old wanting $100,000 in coverage on a ten-year term can expect to pay a monthly premium of about $13. For $500,000 coverage on the same ten-year term, a 30-year-old can expect to pay an average of $25.
When weighing the rates, life insurance companies consider age, gender, smoking status, health, job or lifestyle risks, and family health history. The cost of life insurance will certainly not ruin their budget since it could cost less than a take-out, yet provide them with a safety net at a critical time.
2. Starting Family
Millennials are at an age where they settle down and start a family. Therefore, establishing financial security with an income replacement for their dependents in case they die makes economic sense.
Working out the payout amount needs some research, but a general rule in the industry is the value of their annual pay times five. Life insurance aims to create a financial safety net for partners relying on each other to help their loved ones pay off the mortgage, meet all the expenses, and educate kids in a worst-case scenario.
The number of children is also an important factor. Each child has his/her own expenses. We recommend that you think about factors such as education expenses and extra funds in case of medical conditions.
3. Buying Their First Home
Most Millennials are now either purchasing their first home or have a loan for it and will need life insurance with a cash value equal to the home’s value or more. As the largest group of homebuyers, even those young people without children must insure the cash value of their home to help their beneficiaries get the mortgage paid off without difficulties. Here is where you can discover how much insurance coverage you need.
4. Enhancing Employer Coverage
Many employees get life insurance as a perk but often lose this if they switch jobs. Private life insurance can protect young people from losing their coverage, no matter the circumstances.
Final Take
Therefore, younger people qualify for lower premiums and care about ensuring their loved ones have the protection provided by life insurance. Lucky for them, technology makes it easier to research and decide which one is best for them. Keep in mind that there are many insurance companies that provide policies and each of them has a slightly different offering than the other. Ensure to understand the contract and what the insurance company is offering you.
For example, Get Covered is an interactive online quote provider by AplusWealth Inc., making it easier for younger people to research prices and insurers. Here, they can compare credible providers, terms, and prices online before deciding on the best fitting for their family’s financial needs.