Posted: Aug 01

Life Insurance for Millennials: Why It’s Not Too Early to Get a Policy

In an era where millennials are redefining priorities, the concept of a life insurance policy might seem like a distant concern. However, the reality is quite the opposite. Getting a life insurance policy sooner rather than later can be a smart move for a myriad of reasons. Let's explore why it's a wise decision to consider life insurance in your financial planning, even at a younger age. Get in touch with a Vistaplan advisor today to get started.

Understanding the Basics of Life Insurance

Before diving into the reasons, let's briefly touch upon what life insurance is. A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured's death. This can provide financial protection and peace of mind for you and your loved ones.

The Early Bird Advantage

• Lower Premiums: Securing a life insurance policy at a younger age capitalizes on the advantage of being in better health, typically resulting in lower premium rates. This proactive approach not only secures a more affordable rate but also guarantees savings over the policy's duration, as premiums remain constant even as you age. The financial benefits of this early decision extend well beyond immediate savings, offering long-term financial efficiency and smart planning.

• Financial Security for Loved Ones: Life insurance is a critical safety net that ensures financial stability for your dependents in the event of your unexpected passing. This coverage can provide for daily living expenses, future educational costs, and maintain the standard of living for your loved ones. It's a strategic move to safeguard the financial future of those you care for, ensuring they remain financially secure and can continue to pursue their goals without the burden of financial hardship.

• Debt Protection: With many millennials navigating the challenge of significant debts, from student loans to mortgages, a life insurance policy offers a solution to protect family members from inheriting these financial obligations. The payout from a life insurance policy can be directed towards settling outstanding debts, ensuring that your financial responsibilities are resolved and not passed on to your loved ones. This protection is essential for maintaining the financial well-being and stability of your family, relieving them of potential financial stress in already difficult times.

Life Insurance Isn't Just for the Elderly

There's a common misconception that life insurance is only for those in their later stages of life. However, life insurance can be a crucial part of financial planning for millennials for several reasons:

• Income Replacement: For many households, the loss of the primary earner can have catastrophic financial consequences. A life insurance policy stands as a critical pillar of financial security, designed to replace the income that vanishes upon the untimely death of the breadwinner. This replacement income ensures that the lifestyle and daily needs of the dependents are not drastically altered, covering everything from day-to-day living expenses to long-term financial goals like education and retirement savings. By providing a financial safety net, life insurance helps maintain the household's financial stability, preventing any abrupt descent into financial hardship.

• Covering Final Expenses: The cost of final expenses, including funeral costs and any outstanding medical bills, can be a significant financial burden, often at a time when families are least prepared to handle it. A life insurance policy addresses this concern directly by allocating funds specifically for these costs, ensuring that your loved ones are not left with the financial responsibility of settling your final affairs. This coverage relieves your family from the added stress of financial strain during a period of mourning, allowing them to focus on healing and remembering your life without the looming worry of financial obligations.

• Long-Term Financial Planning: Certain types of life insurance policies, particularly whole life and universal life, incorporate a cash value component that accrues value over time. This feature not only offers the peace of mind that comes with the death benefit but also serves as a versatile financial planning tool. The cash value can grow at a guaranteed rate or in line with the performance of the policy's underlying investments, providing a potential source of funds that can be borrowed against or withdrawn during your lifetime. This aspect of life insurance makes it a unique vehicle for long-term financial planning, offering an additional layer of financial flexibility and security as you navigate through life's various stages.

Breaking Down Myths

Many millennials might shy away from getting a life insurance policy due to misconceptions. Let's debunk a few:

• "I'm Single and Don't Need It": The notion that single individuals don't require life insurance overlooks the potential financial obligations that can linger after one's passing. Life insurance policies for singles can address personal debts, cover funeral expenses, and ensure any co-signed loans, such as student loans or mortgages, do not become a burden for co-signers. It's a responsible way to manage your financial affairs, ensuring that your obligations are settled and not transferred to loved ones or friends.

• "It's Too Expensive": The perception that life insurance is prohibitively expensive is often a misconception, especially for the young and healthy demographic. Premiums are typically lower for younger individuals due to the lower risk they present to insurers. This makes it an opportune time to secure a policy at a more affordable rate, providing essential coverage without breaking the bank. It's worth exploring options and quotes to see just how manageable life insurance can be as part of a comprehensive financial plan.

• "I Have Life Insurance Through Work": Relying solely on employer-provided life insurance policy can be risky, as such policies are often tied to your employment status. If you change jobs or lose your job, you might find yourself without coverage. Additionally, the coverage provided by employers is generally limited and might not meet all your needs, especially if you have dependents or significant debts. It's important to assess your personal situation and consider an individual policy to ensure adequate and continuous coverage.

Take Action Now

Waiting to get a life insurance policy can be a costly mistake. The more you delay, the higher the premiums can get. Here are steps to take now:

1. Assess Your Needs: Before diving into the world of life insurance, take a moment to carefully consider both your current financial situation and future obligations. This includes debts, ongoing living expenses, and future plans that could impact your financial responsibilities, such as starting a family or buying a home. Understanding these factors is crucial in determining the amount of coverage that will provide adequate protection for your unique circumstances, ensuring that your policy is tailored to meet your specific needs and goals.
2. Shop Around: The life insurance market is filled with a variety of options, each offering different benefits and premiums. Resist the temptation to go with the first policy that comes your way. Instead, take the time to explore and compare the diverse offerings from multiple insurers. Look at the terms, benefits, and costs associated with each policy to identify the one that aligns best with your financial situation and coverage needs. Remember, the right life insurance policy is one that offers the right balance of coverage and affordability for your budget.
3. Consider Your Health: Your health status plays a pivotal role in determining your life insurance premiums. Insurers consider healthier individuals to be lower risk, which can translate to more favourable premium rates. If you're contemplating life insurance, now is a great time to adopt healthier lifestyle choices, such as regular exercise, a balanced diet, and quitting smoking. Not only will these changes contribute to better overall health and wellbeing, but they can also have a positive impact on your life insurance premiums, making coverage more affordable.

Looking Ahead

Remember, getting a life insurance policy is not about the immediate benefits but securing peace of mind for the future. It's a crucial step in protecting yourself and your loved ones against the financial uncertainties of life. If you haven't considered a life insurance policy yet, now is the time to start. It's not too early to ensure your financial security and the well-being of those you care about. Take the step today to explore your options for a life insurance policy and give yourself and your loved ones the gift of peace of mind. Call a Vistaplan advisor today to learn more.

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About the Author - David Motkoski

David is a well-respected insurance advisor with over 30 years of experience helping healthcare professionals, business owners, and their families secure their financial futures. He takes the time to make certain his clients understand the life, disability, and health insurance products they are purchasing, so they can make the right choices for their budgets, plans, and futures. CONNECT WITH ME ON LINKEDIN