There is facial recognition software that will name your friends
and ask you if you want to tag them on your social media profile. You
can text someone a message from half a world away, and you can play a
video game with a complete stranger on another continent. Technology has
accomplished so many amazing things in the past 20 years, but there’s
still no way to bypass our own mortality.
While it’s never pleasant to discuss, your death is inevitable. It is easy to forget this when you’re young. Everything seems to be going as planned and most young people have little connection to the heartache of death, outside of the passing of their grandparents.
But early adulthood is an advantageous time to purchase life insurance. The benefits to doing so are many. If you’re not sure whether you need insurance or not, consider the following:
1. You have dependents. First of all, life insurance is not for you. It’s for those you leave behind. The people who depend on you—your dependents. Dependents don’t have to be children. For insurance purposes, these are people who
rely
on your income, who would have to go without, should something happen
to you. This could be a spouse, a live-in boyfriend/girlfriend with whom
you own a house. You should also consider your children, parents,
grandparents, siblings with special needs, etc.
If you have any dependents in a long-term care situation (or those you could envision requiring this help in the near future), either due to old age or disability, life insurance is a necessity. Most young people simply do not have the financial means necessary to cover these sorts of long-term care expenses. An insurance policy can help with that.
Additionally, if you have a stay-at-home spouse, consider the ramifications of your death. Not only would this person be forced to secure employment outside of the home, but pay for childcare as well. How quickly do you think your spouse could find something that would cover these expenses?
Life insurance gives you peace of mind, knowing your loved ones wouldn’t be financially affected by your death.
2. Costs are lower. Life insurance premiums are risk calculations based on mortality. Since average life expectancy is somewhere around 79 years old, there’s less risk for a company to insure a Millennial in good health. Less risk for the company, means relatively inexpensive premiums for you. Coverage can usually be obtained for pennies on the dollar. (Think about the cost of a fancy latte every week.)
Premiums are based on the age of the applicant and rates usually increase with age. If you purchase a policy as a 20-something, it will be at a lower rate than if you wait until you’re 40. You could save a couple hundred dollars a year, for as many as 30 years, if you act now versus later.
Plus, qualifying for coverage as a healthy Millennial can be a lot easier and less expensive than applying after you’ve been diagnosed with a health condition. Don’t wait. A health issue can crop up over night and qualifying for a life insurance policy can be a very different experience once you’ve been diagnosed.
3. You’d like an additional savings vehicle. If you always have a reason to dig into your savings, consider purchasing a permanent life insurance policy that not only has a death benefit but a savings component as well. You can borrow against it as well as use it in retirement, depending on the policy and company behind it.
Think of a permanent life insurance plan as a portfolio asset that will help secure your loved ones and your retirement. Your generation understands the importance of saving for its future. A permanent life insurance policy can help you do that with minimal effort on your part plus there’s no limit to what you can contribute to the savings portion, unlike a 401(k) or a Roth IRA. Once you’re retired, you can draw on the savings portion of the policy tax-free.
4. You’d like to supplement your company-backed insurance. Millennials who are fortunate enough to have a good paying job with excellent benefits may receive life insurance through their company. While this provides some peace of mind, consider purchasing other, independent coverage. If you become sick and are no longer able to work, your work policy will no longer cover you. Since you’ve been diagnosed with a terminal illness, you may not be able to secure a life insurance policy at this time. Now, when your family needs the benefit the most, they no longer have it. Plus most basic coverage will not cover everything your family needs at a time when they are ill-equipped to provide for themselves.
5. You want your funeral expenses and debts covered. Even if no one depends on your income, such as a spouse or children, you should consider your debts and your burial expenses. The average funeral alone costs between $10,000 and $15,000. Some debts would be waived with your death while others would be collected through whatever assets you left. Are your parents in a position to handle these sorts of expenses or will this create a financial hardship for them?
Millennials will want to decide what amount of coverage they need to pay for both funeral expenses and their recoverable debts when deciding an amount of insurance coverage.
6. You’d like to leverage riders for more coverage. Life insurance is not all about the death benefit paid out to your loved ones. There are also riders that can be added to policies to address needs for things like long-term care and disability. You are more likely as a young person to be injured in an accident than you are to be killed in one. If you were injured and unable to work for a certain period, or permanently disabled, do you have a plan in place to cover your expenses? A disability rider to your life insurance policy could safeguard against the unexpected.
Frankly, most people will never need the financial comfort provided by a life insurance policy while they’re young. But if your family is the one who does, your forward thinking and planning will ease their concerns during a very difficult time. How will you plan for your future?
While it’s never pleasant to discuss, your death is inevitable. It is easy to forget this when you’re young. Everything seems to be going as planned and most young people have little connection to the heartache of death, outside of the passing of their grandparents.
But early adulthood is an advantageous time to purchase life insurance. The benefits to doing so are many. If you’re not sure whether you need insurance or not, consider the following:
1. You have dependents. First of all, life insurance is not for you. It’s for those you leave behind. The people who depend on you—your dependents. Dependents don’t have to be children. For insurance purposes, these are people who
rely
on your income, who would have to go without, should something happen
to you. This could be a spouse, a live-in boyfriend/girlfriend with whom
you own a house. You should also consider your children, parents,
grandparents, siblings with special needs, etc.If you have any dependents in a long-term care situation (or those you could envision requiring this help in the near future), either due to old age or disability, life insurance is a necessity. Most young people simply do not have the financial means necessary to cover these sorts of long-term care expenses. An insurance policy can help with that.
Additionally, if you have a stay-at-home spouse, consider the ramifications of your death. Not only would this person be forced to secure employment outside of the home, but pay for childcare as well. How quickly do you think your spouse could find something that would cover these expenses?
Life insurance gives you peace of mind, knowing your loved ones wouldn’t be financially affected by your death.
2. Costs are lower. Life insurance premiums are risk calculations based on mortality. Since average life expectancy is somewhere around 79 years old, there’s less risk for a company to insure a Millennial in good health. Less risk for the company, means relatively inexpensive premiums for you. Coverage can usually be obtained for pennies on the dollar. (Think about the cost of a fancy latte every week.)
Premiums are based on the age of the applicant and rates usually increase with age. If you purchase a policy as a 20-something, it will be at a lower rate than if you wait until you’re 40. You could save a couple hundred dollars a year, for as many as 30 years, if you act now versus later.
Plus, qualifying for coverage as a healthy Millennial can be a lot easier and less expensive than applying after you’ve been diagnosed with a health condition. Don’t wait. A health issue can crop up over night and qualifying for a life insurance policy can be a very different experience once you’ve been diagnosed.
3. You’d like an additional savings vehicle. If you always have a reason to dig into your savings, consider purchasing a permanent life insurance policy that not only has a death benefit but a savings component as well. You can borrow against it as well as use it in retirement, depending on the policy and company behind it.
Think of a permanent life insurance plan as a portfolio asset that will help secure your loved ones and your retirement. Your generation understands the importance of saving for its future. A permanent life insurance policy can help you do that with minimal effort on your part plus there’s no limit to what you can contribute to the savings portion, unlike a 401(k) or a Roth IRA. Once you’re retired, you can draw on the savings portion of the policy tax-free.
4. You’d like to supplement your company-backed insurance. Millennials who are fortunate enough to have a good paying job with excellent benefits may receive life insurance through their company. While this provides some peace of mind, consider purchasing other, independent coverage. If you become sick and are no longer able to work, your work policy will no longer cover you. Since you’ve been diagnosed with a terminal illness, you may not be able to secure a life insurance policy at this time. Now, when your family needs the benefit the most, they no longer have it. Plus most basic coverage will not cover everything your family needs at a time when they are ill-equipped to provide for themselves.
5. You want your funeral expenses and debts covered. Even if no one depends on your income, such as a spouse or children, you should consider your debts and your burial expenses. The average funeral alone costs between $10,000 and $15,000. Some debts would be waived with your death while others would be collected through whatever assets you left. Are your parents in a position to handle these sorts of expenses or will this create a financial hardship for them?
Millennials will want to decide what amount of coverage they need to pay for both funeral expenses and their recoverable debts when deciding an amount of insurance coverage.
6. You’d like to leverage riders for more coverage. Life insurance is not all about the death benefit paid out to your loved ones. There are also riders that can be added to policies to address needs for things like long-term care and disability. You are more likely as a young person to be injured in an accident than you are to be killed in one. If you were injured and unable to work for a certain period, or permanently disabled, do you have a plan in place to cover your expenses? A disability rider to your life insurance policy could safeguard against the unexpected.
Frankly, most people will never need the financial comfort provided by a life insurance policy while they’re young. But if your family is the one who does, your forward thinking and planning will ease their concerns during a very difficult time. How will you plan for your future?
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