By Nicole McConico
Having a conversation about planning for the unknown or a death occurring is hard for most people. It is definitely easier to discuss a recent travel destination or trending sports topic with a millennial than life insurance.
According to a recent T. Rowe Price survey, only about one in five millennials is currently saving more than 15 percent of his or her income. The question is: If a person is not financially prepared, who will be left with the financial burden? More than likely, it will be a loved one, who may have to take care of final arrangements, as well as any dependents or debt left behind. Here are some tips to consider for getting life insurance:
Your Health is a Big Factor
The cost is much lower for a person who is in excellent health. You are seen as a lower risk, and that means you’ll qualify for better rates. Waiting to get coverage may cost you later on, with you even getting denied by some companies if your health does not met their underwriting requirements. One of the great things about getting life insurance while you are healthy and young is that as long as you continue to keep your policy in force by making your premium payments, your coverage will continue even if you develop a condition/illness later on in life.
Student Loan Debt is a Huge Expense
The majority of millennials have student loan debt. According to Experian data, student loan debt in the United States reached an all-time high of $1.4 trillion in the first quarter of 2019. That’s an increase of 116 percent in 10 years, and represents one of the country’s most significant and widespread financial burdens to date. Having adequate life insurance can prevent your loved ones from having to worry about covering the cost of your student loan debt.
Having an Outside Policy is the Best Strategy
Depending on your employer’s insurance may not be a good idea. If you become unable to work or change jobs, most employers will not allow you to continue your coverage. It’s ideal to purchase your own policy outside, in the event you have a job loss or a career change.
What Kind of Life Insurance Should You Buy?
There are two main types of life insurance: term and permanent (whole life). Term is basically like leasing a car, and permanent is like owning a car. Term covers you for specific time period, usually 10, 20 or 30 years. It is usually much cheaper than permanent insurance, but it may not be a fit for every individual. Permanent life insurance includes universal life, variable life and whole life, all which will cover you throughout your life.
Permanent life insurance has fixed premiums that will never increase over the years. It will build cash value that accumulates on a tax-deferred basis and may be borrowed against or even used to cover your premiums. For some, permanent life insurance is the best solution, and in some cases, having both may be the best solution. Besides age, the cost will vary depending on gender and health. On average, men will pay 24 percent more for life insurance than women. This is because men tend to have a shorter life expectancy.
It is imperative that millenniums become more proactive about investing in a policy. Life insurance is one of the best ways to show the ones you love the most how much you really care.
Nicole Danielle McConico is a licensed agent. www.healthmarkets.com/nmcconico 704-777-3181