When you’re young, you tend not to think about life insurance. In my 20s, it was the furthest thing from my mind as my fiance and I were planning our wedding.
But my father-in-law not-so-gently urged us to pursue it, and we soon found ourselves with an agent squeezed into our tiny living room, telling us all about whole life insurance vs. term life insurance, term life vs accidental death, and how you can save money buying life insurance early in your adult life.
Outside of family advice, though, how do young adults know to take advantage of the best buying time for life insurance? Let’s look at why it’s smart to buy life insurance young and how insurance companies should go about to maximize drawing millennials in.
The Age of Millennials
When we talk about millennials, who exactly are we talking about? There are so many generational monikers that it’s easy to lose track of which group belongs where.
One of the reasons for this is because although about three or four generations span 100 years, there are at least double the amount of names tied to those born in certain years. A few examples are:
- The Depression Era (1912-1921)
- World War II (1922-1927)
- The Silent Generation or Post-World Cohort (1928-1945)
- Baby Boomers (1946-1964)
- Generation X (1965-1980)
- Millennials or Generation Y (1981-1996)
- Post-Millennials or Generation Z (1997-Present)
So given that list, millennials are 22-37 years old.
Millennials are delaying getting married and having children mainly for economic reasons — wages, housing costs, student debt — so it’s understandable that this age group doesn’t usually place life insurance at the top of their list.
Reasons Millennials Should Buy Life Insurance
There are a few compelling reasons why millennials should be looking into life insurance. Millennials are navigating a sea of uncertainty, even more so with the current coronavirus pandemic.
However, they can achieve some stability with a life insurance policy. Research shows most millennials don’t have life insurance because they grossly overestimate the cost, but it’s more affordable than they think.
Let’s look at a couple of reasons why life insurance is a good idea for millennials.
#1 – Plan for Your Family’s Future
Life insurance is one of the four insurance types that protect your family’s future. As Benjamin Franklin infamously wrote, “In this world nothing can be said to be certain, except death and taxes.” While taxes are immediate, death can seem very far away. However, it is still going to happen to all of us.
If you have someone else depending on your income, you need life insurance. And this doesn’t necessarily mean children. Life insurance can also be used to pay off debt for your spouse. No spouse? Then think of your parents.
It’s recommended that you buy enough insurance to cover an amount equal to ten times your annual income. If this seems steep, remember that this gives those who depend upon you the means to cover funeral costs and any other expenses at the time of your death.
It also provides enough funds left over to create a financial cushion while your loved ones. You do not want to saddle them with struggling to pay regular monthly expenses or deal with the shock of paying a mortgage or a private student loan debt on their own while they are going through the grieving process.
When you’re just starting out it may seem impossible to add another expense. But try managing your budget with a budget guide.
#2 – Save More by Planning Early
One way to ease your mind about budgeting for life insurance is to remember that the younger and healthier you are when you do it, the better your life insurance rate. You can lock in a more-affordable rate because you pose less of a risk to the insurer.
For example, say you want to buy a 30-year term life insurance policy with a $500,000 death benefit. At age 30 and in excellent health, your monthly premium would be $34. If you want until you’re 40, that jumps to $53 a month.
Don’t wait until you’re already at retirement age because at that point, insurance will be more expensive.
How Insurance Companies Court Millennials
Millennials are fiercely independent, highly optimistic, and hyper tech-oriented. These attributes have given the insurance industry a challenge as it is an industry that’s long in the tooth, centered on planning for life’s tragedies, and not exactly seen as fast moving.
But millennials are also pragmatic. In fact, some insurance companies have found ways to market to millennials to the point of research showing millennials view life insurance in a more favorable light than Gen-Xers or even Baby Boomers!
So here’s what some insurance companies have discovered works.
#1 – Speak the Millennials’ Language
Guardian Life has earned the highest marks from millennials. Their first step was updating their “voice” from less formal to more conversational. They speak with their audience — not at them — and they made their content more customer-centric and with a focus on specific life stages and events.
#2 – Meet Millennials on Their Turf
Northwestern Mutual appeals to millennials’ online lifestyle by its acquisition of LearnVest, an online-based financial planning company popular with millennials. They created the position of digital officer and have increased their digital know-how.
MassMutual, through having acquired HavenLife, offers a streamlined solution for buying life insurance entirely online. And behind the scenes, they are enhancing their SEO and SEM programs to increase visibility on Google, which drives on traffic on their websites.
Insurance companies are leveraging technology to cover the spectrum of platforms millennials use. They’ve evolved from traditional methods of promotion by creating and repurposing content online and on social media platforms.
#3 – Show Millennials How Smart and Fast You Are
John Hancock can make an underwriting decision in as few as three days for qualified applicants, thanks to proprietary underwriting software. Other companies have followed suit and have faster, automated systems known as accelerated underwriting.
This method greatly appeals to millennials who are used to getting information fast with just a few clicks.
The Best Insurance Companies for Millennials
Millennials have grown up being surrounded by multiple options, and that shows when it comes to life insurance companies that provide them with sufficient coverage without straining their wallet.
There are a variety of companies that are recommended as great options for securing an affordable safety net. A few of these are:
- Lincoln Financial
- Mutual of Omaha
- State Farm
- Transamerica
- AIG
MIllennials can also match their independent streak by working with an independent broker. This is a good avenue to pursue to find customized coverage that matches their needs. It never hurts to shop around and see if you can find a more accommodating rate.
So the pros wildly outweigh the cons in getting life insurance when you’re a millennial. It is another step you need to take for “adulting,” so why not incorporate it early and save money in the long run?