As the first digital generation moves toward families and thinking about the long-term future, here is what needs to be kept in mind.
It’s no secret that young adults are facing unique financial challenges these days. Millennials are trying to figure out how to save for retirement while taking on their student loan debt, which can be overwhelming on their own. One thing that may be pushed to the back-burner is having adequate life insurance. At a younger age it’s easy to think you don’t need life insurance because you’re just starting a career with barely any assets and are relatively healthy. There are, however, some pretty compelling reasons to get life insurance as a young adult.
Lock in Better Rates Earlier in Life
Life insurance premiums are based on a lot of different factors. Two of the largest factors are your age and overall health. The younger and healthier you are, the less you’ll pay for coverage. As a young and healthy person, you are less of a liability for the company. Even if you wait until your late thirties or early forties, you’ll see large increases in the monthly cost. Getting coverage while you’re young can help lock in good rates for the rest of the policy. Having that lower rate for the entirety of the policy will help you save money as you age.
Lower the Cost of Funeral Expenses
When you’re young you don’t think about what would happen after you die, it seems to be too far away. It’s hard to think about, but it may not be. If it isn’t, who is going to pay for your funeral? On average, a funeral can cost between $6,000 and $10,000. Even if it is just a small get-together, someone is still getting stuck with the bill. Purchasing a life insurance policy as a young adult can help alleviate the stress of paying for a funeral.
Ease the Financial Burden on Your Loved Ones
Millennials are under record-breaking levels of student debt. If something were to happen, that debt could fall onto your parents. One example is if your parents took out a PLUS loan that you’re making payments on, they would be responsible for the balance if you passed away suddenly. Maybe you’re married and have a joint credit card with debt, or you have a home that you and your spouse co-signed. If you were to pass away, your spouse would be responsible for that alone. When you have enough life insurance, it will help your family take care of all these financial issues.
If you have chosen to have kids, you want to make sure they would also be taken care of in a worst-case scenario. Especially if your spouse is a stay-at-home parent, they would need money to replace your income for at least a little while. Even if you both work, life insurance could come in handy if you have to pay for any higher education costs down the road.
Don’t Rely on Your Employer
If you’re fortunate enough to have a job that offers a nice benefits package, you may already get some life insurance through your employer’s plan. It could seem that for a single millennial with no family, that policy would be sufficient. Buying a separate policy can still be a smart move. If you developed a serious illness that left you unable to work, it could help cover you if your policy with your employer lapsed. Some types of life insurance also allow you to borrow against it which would allow you to cover some of your medical costs if you lose your health insurance. It would also cover you in the event you were laid off, changed jobs or your employer goes out of business.
Your employer’s insurance may not be the best policy for you. It might be more expensive to add additional coverage, than to purchase a separate policy. You can also see if the rates are higher through the group life policy. You will also want to compare features or coverage you care most about.
A Number of Life Insurance Options Exist
Farm Bureau Financial Services offers many different kinds of life insurance policies you can choose from, depending on what is most important to you.
Term Life Insurance is one of the most affordable types of life insurance. It provides coverage for a specific period (or “term”). Your coverage would end when the term ends, or until you converted it to a more permanent life insurance policy. This is a good option when you’re just starting out, raising your family or building your business.
Whole Life Insurance is a permanent policy. It can help provide financial protection for your loved ones upon your death. You can also have access to your policy’s accumulated cash while you’re living.
Universal Life Insurance provides flexibility. It is a form of whole life insurance that covers you throughout your lifetime. Along the way you can adjust certain aspects to meet your needs and goals.