So, it turns out life insurance isn’t just for the elderly. Whether you’re planning to scale the Andes or binge another season of House of Cards, it’s pretty important for everyone to have it. However, less than 20% of millennials indicate that they would purchase life insurance. As a millennial, the feelings of being invincible and having all the time in the world are all too common; and much like the last piece of pizza, nobody wants to believe those feelings can ever disappear. But being prepared for the curveballs life may throw you can be beneficial in the long run. This is where life insurance comes into play. By insuring your life, you can help ensure the quality of your loved ones’ lives as well.
Common myths and misconceptions surrounding the purchase of life insurance
Too expensive: On average, for someone who is 35 and under and doesn’t smoke, term life insurance can cost less than 30 dollars per month to get 250,000 dollars worth of coverage. To put this into perspective, a month of life insurance can cost less than a movie date.
Options are limited: There are many different courses of action when deciding what life insurance policy you should get. Whether you’re thinking on a budget, within a certain time frame, or for the long-term, you have got yourself some options.
Not a priority: Sure, rent, groceries, and that Spotify subscription can seem like more immediate expenses to devote your money to. However, by incorporating life insurance into your monthly budget, you also plan for those more distant expenses to make sure your family won’t be stuck with unexpected costs, such as funeral arrangements and co-signed loans, if something were to happen to you.
Reasons you should get life insurance in your 20’s and 30’s
Lock in those low premiums: Just like good scotch, life insurance gets more expensive with age. When an insurance company develops a policy for an individual, they consider the likelihood that the person will file a claim and cash in on their policy before the term expires. As various medical conditions become more probable and health deteriorates along with age, your initial premium will increase along with that risk. Buying while you are young and healthy is a good way to plan for future insurance needs because monthly premiums will be lower. A monthly fee in your 20’s can cost less than 30 dollars per month; whereas a monthly fee in your 40’s will cost around 50 dollars per month, that’s almost a 100% increase in price over 20 years.
Those student loans aren’t going away: Well, it’s 2016 and with that comes crippling student loans. Most young people don’t have the credit to sign these loans on their own and will need someone to co-sign with them. In fact, the average student debt for millennials is around 30,000 dollars and continues to increase. If something were to happen to you, the responsibility to pay off these co-signed loans will fall upon the co-signer which can be financially debilitating.
Funerals are expensive: Funerals can range in price from 7,000 to 10,000 dollars. That’s about a year’s worth of groceries for a family of four. Even the casket alone can cost up to 2,000 dollars. Having life insurance can help alleviate these costs and eliminate the financial stress from the grieving process of loved ones.
You have dependents: If there is someone who depends on your income, whether it be a spouse, child or parent, having that income stripped away unexpectedly can be a shock and can seriously impact the day-to-day life of these dependents. For example, getting life insurance now can help make sure your kids will have financial assistance for college or your spouse will be able to pay your mortgage if an unexpected death were to occur.
You can choose the plan that’s best for you: There are two types of general plans, term and permanent plan life insurance. Term is a life insurance policy for a set time frame such as 10, 20 or 30 years. Permanent life insurance will cover you for your entire life as long as the premiums are paid. With a permanent policy, you can decide between whole, universal or variable, all of which change depending on how you want to invest your money and the flexibility you would like to have. Term policies tend to be seen as a better choice if you are on a tighter budget; whereas permanent policies are seen as more expensive but have a better return over a longer period of time.
Benefiting while you’re still alive: If you opt for a permanent plan, this can double as a savings account, providing you cash value while you are still alive. This can help keep your money safe and provide you with more financial security throughout your lifetime as well.
The bottom line: Getting insurance while in your 20’s and 30’s can help more than just yourself and prepare you for future expenses. By thinking about the long-term while you are healthy and young, you can help strengthen your loved ones’ financial security in unexpected circumstances and get more bang for your buck.
Curious about what kind of coverage you should get? Check out this calculator to discover the best plan for you.