Millennials – do you need life insurance?
It can be hard to decide when the right time to get life insurance is, especially when you’re still young. There are a few articles flying around suggesting that millennials are avoiding life insurance. Is it because they aren’t buying into the idea? Or is it simply because they don’t need it?
The truth is, it really depends on the individual. Millennials may not be ready for life insurance, a bit like a pension. But realistically, it could help them to protect their partners or the people they love in the future.
Is it that employers aren’t providing a competitive benefits package?
The first time I had life insurance was due to the company that I worked for. It enabled me to have the right level of cover that was appropriate for my age and circumstance. In addition to that, I was well aware that my needs would change further down the line and that my company insurance may not be enough.
Without that knowledge, I probably wouldn’t have gotten life insurance until a later date. Perhaps when it was too late or a lot more expensive. Small businesses are popping up everywhere and not providing their employees with benefits. Benefits that people used to get in abundance when they showed their dedication to a role. Now the market has changed, and more people move jobs, companies don’t feel the need to entice their employees long-term. Or they don’t have the money. Unless, of course, they’re a huge company. Which can be difficult for someone with less experience to be a part of
In fact, with wages staying relatively low in comparison to inflation, jobs being scarce and the housing market being almost impossible to enter into, it’s not surprising that millennials aren’t investing in life insurance.
More millennials actually follow budgets
Although there is an outcry about how much avocado toast millennials eat, it’s actually been said that they are more fiscally responsible than people think. Around 60% follow budgets to make sure they have enough money set aside for emergencies.
In addition to this, 60% claim that their cost of living takes up most of their money each month. So financial priorities are very much on their minds.
It’s when you start a family when it really matters
Life Insurance becomes important when you start a family. Essentially, you don’t want your dependants or spouse to be left with the burden of debt or forced to sell the house they live in because they are unable to afford it.
If you have a significant amount of debt and no family, it might be worth having a conversation with your parents to see if they are able to take it on. If not, then having a small amount of life insurance may be worth it.
When you invest in a mortgage, getting life insurance is sometimes required. A joint policy with a co-mortgage owner or a decreasing policy may be enough at this time.
However, chances are your needs will change further down the line. You can always get out more cover late on, either through a renewable policy or by getting an additional policy.
Over covering vs. the race against time
Is life insurance a smart option for millennials?
Life insurance increases with age and health conditions. Therefore, the older you are, the more likely it is that the premiums will be expensive. However, there’s no point getting life insurance or getting too much coverage when you don’t need it.
For millennials, life insurance is all about economic consideration. If life insurance is affordable and can provide you with the protection you need, then it’s worth it. If you have no need, then it’s not.
Looking at life insurance when you are in your 20s or 30s can be the smart option. If you’re young and healthy then it can stay relatively cheap. If you get sick down the line, your policy premiums won’t change. At least if you start the process and get free quotes, then you can see how much it is likely to be when you’re ready for it.
Life insurance when you buy a mortgage
If you have invested in a mortgage and would like that house to go to someone, say a spouse or a dependant, then life insurance will be right for you. It can also be beneficial when you have a family or if you have private student loans that your parents can’t afford to take on.
It’s also worth getting a life insurance policy if you have a co-signer or guarantor. That way, it can protect them against the cost of the debt if you were to pass away.
Funerals can be costly
The average costs of a funeral in the UK is anywhere between £4,000 and £8,000. If you don’t believe that your family has the money to pay for this, then it may be worth getting a small amount of life insurance so that they can.
When saving is a priority
When money is tight, paying off debts and saving to get on the property market is more attractive than investing in life insurance. Realistically, you don’t need a life insurance policy until you have your home. But in order to buy a home, you may need life insurance. It’s a catch 22.
Cost is the main reason millennials don’t purchase life insurance. In reality, insurance is a lot less expensive than they imagine. In fact, a millennial will save money by taking out the policy now rather than later.
It may also be that you haven’t even started saving for retirement, so life insurance doesn’t strike as a priority.
Benefits of getting life insurance as a millennial
One of the main benefits is that the premiums are cheaper due to your age and if you are healthy. It’s easier to set up if there are no health issues that have come into the picture yet. The risk is based on mortality, so the lower your age, the lower your risk which means cheaper premiums.
It also is beneficial if you want your children, spouse, live-in partner or a relative with special needs because you can provide a sense of security for them. Whether this enables them to maintain their current lifestyle, keep their house or at least pay off any debts you have so it doesn’t fall to them.
You have no idea when your health may change, so getting insurance can be beneficial. It also means any debts you have to land on your mum and dads plate if you were to pass away.
Getting life insurance now can be a sensible option, but it’s always better to get the right advice before launching into a policy you don’t need. Millennials with families or parents that can’t afford to take on their debt may want to start looking into life insurance now. It’s always better to compare policies and get the right advice too.