Life Insurance for Millennials

By now, the idea that Millennials are afraid of “adulting” is very obviously out of date. Millennials are in their 30s and 40s now, and they’re buying homes, raising families and setting a tone for healthy work-life balance.

The next step to have it together in life? Making sure your financial plans are set up to help you meet your goals and be prepared for any situation. Looking into life insurance can be one way to help take care of loved ones who depend on you.

What Is Life Insurance, Anyway?

A life insurance policy offers coverage to help financially provide for your loved ones if you pass away. You choose your term length (if you opt for a term life policy), coverage amount and life insurance beneficiary. As long as your premiums are paid and your policy is active and in good standing your beneficiary should receive the death benefit if you die.

Life insurance premiums are based on an assessment of various factors such as your health, age and risky behaviors in your life, whether that’s smoking cigarettes or working as a stunt pilot. Getting life insurance at a young age can help you qualify for lower premium rates. A 40-year-old will tend to face a higher premium than a 30-year-old with the same health status and risk profile because of how the underwriter runs your life insurance risk calculations. The sooner you take action, the sooner you can apply for coverage to help you strengthen your financial plans.

(Want more tips to feel more financially prepared? Here’s how to stay on top of your finances at every age.)

Top Reasons Millennials Need Life Insurance

Not everyone needs a life insurance policy, but lots of families can benefit from the financial security and peace of mind a policy can afford. Here are some top indicators that life insurance should be on your radar:

1. You have kids: The top reason most families go for life insurance is to provide for children. The plan is to be there for every family vacation, football game or opening night. Maybe you’ve daydreamed about celebrating your kids’ college graduation. If you pass away, your life insurance death benefit can provide funds your loved ones need to help reach those milestones. (Here’s what you should know about life insurance for parents.)

2. You have a house: Millennials make up a sizable share of home buyers. Life insurance can help ensure that your partner has funds to pay off the mortgage in a worst-case scenario.

3. You have debt: Credit card debt, student loans and other debts can make finances challenging. While federal student loans discharge if you die, some private loans won’t, especially if a parent co-signed on the debt. Factoring in life insurance coverage that can help settle any outstanding debts can give your family a plan for how to face those bills at a painful time. Life insurance can help pay off many different kinds of debts. In a recent survey, Millennials and Gen Z were the likeliest generations to say they needed more life insurance.

If there are so many good reasons to buy life insurance, why does this task end up at the bottom of the list? Misconceptions about the cost of life insurance can be an obstacle. Worries about confusing application processes and the hassle of a medical exam might also make some people procrastinate. Fortunately, technology has helped make life insurance applications more convenient. For example, online applications and the rise of no-exam life insurance policies can make qualifying for life insurance a quicker, simpler process.

Best Kinds of Life Insurance for Millennials

Two broad categories of life insurance include term and permanent. Term life policies cover a specific amount of time (e.g., 20 years). If the term expires, you won’t be covered anymore. Whole life policies cover you for your entire life as long as premiums are paid, but premiums are much higher for the same amount of coverage.

Whole life and term life insurance both have their advantages, and you should tailor your insurance to fit your specific circumstances. Term life premium rates are typically lower for the same amount of coverage, which can make it easier to balance life insurance needs with other goals like saving for retirement or planning a college fund.

What Term Length and Coverage Do Millennials Need?

Recent years have proven you can never predict what may come next. The pandemic, economy dips and other major events can leave you hungry for clear answers about how best to help protect your family from any potential crisis.

Make sure that you have a long game approach to the product you’re buying. It’s important to research policies with premiums you can afford so that it’s no problem keeping your policy active. At the same time, be mindful of how much coverage you need to account for your debts and goals, and how long you want insurance to last.

Childfree Millennials with 15 years left on a mortgage may choose a different term than parents of a 4-year-old who want to stay covered through their child’s college years. If you are considering more children in the future and want room to grow, or if you’re at the beginning of a 30-year mortgage, you might consider 30-year term life insurance, for example. Think about not only your debts but your income and lifestyle. Would your partner be able to cover monthly bills solo, and if not, what would it take to close the gap?

Whatever term length and coverage amount you choose, the goal is to be financially equipped to handle the unexpected for years to come.

Millennials have put their stamp on the world, from Facebook to representatives in Congress. For most of us, the most meaningful impact we make is our contribution to our families, and life insurance can be one more way to help protect what’s most important to us.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards. This article has been reviewed and approved by a compliance professional who is a licensed life insurance agent.

Information provided is general and educational in nature, is not financial advice, and all products or services discussed may not be offered by Fabric by Gerber Life  (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Consult an attorney or tax advisor regarding your specific legal or tax situation. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. The views and opinions of third-party content providers are solely those of the author and not Fabric by Gerber Life.