When you are young and healthy, you can feel invincible. Which could be one of the reasons why among millennials, ages 18 to 34, only 20 percent surveyed believed they will probably buy life insurance at some point. But, you might ask, why would you want to pay for insurance when you’re just starting out in life?
Why Young People Buy Life Insurance
Reasons to get a life insurance policy while you’re young include:
- You don’t want to leave burial and final expenses to family members
- You’ve taken out a loan and would like that covered if necessary
- You want to make sure your children have college covered
- A family member is dependent upon you for support
- You want to lock in a good price for the long run
- You might want to use insurance for estate planning
Basically, life insurance can be used to protect others from risk that, in some instances, could be disastrous.
Why a Millennial May Not Want Life Insurance
There are cases where you may not need to purchase life insurance. If you are young, single, without dependents and don’t have any major loans yet, a life insurance policy may not be necessary. Also, if you have a tax-advantaged IRA, Roth IRA or 401(k) plan and can maximize your contributions, you probably don’t need to purchase insurance as an investment for future retirement.
What Type Should You Buy?
There are two kinds of life insurance policies to consider: short-term and permanent. Which type to buy depends on circumstances. Some people opt for several policies to cover multiple issues.
Term life insurance – This policy type covers you for a specified number of years, such as 10, 20 or 30 years. Premiums are cheaper, especially if you’re a young non-smoker in good health. Some people purchase a term policy to ensure payment of a mortgage or the future cost of putting children through college.
Whole life insurance – Premiums are more expensive with whole life. The policy remains effective throughout your entire life and includes an investment factor. Where term life policies are cheaper because there’s a chance it will never require a payout, whole life has an inevitable payout.
Another form of permanent life insurance is universal life, which offers more flexibility. For a breakdown of the pros and cons of policy types, see our article, What’s the Difference: Term, Whole and Universal Life Insurance.
Where Millennials Buy Insurance
Research shows that the millennial generation would rather shop online than call a specialist. In fact, the feeling is that they can trust an online source more than they think they can trust a sales person.
Interested in what kind of life insurance policy you can purchase for how much? Our online tool quote generator tool will help you compare quotes so you can determine which policy is right for you.