Life Insurance: Millennials And Their Coverage Choices

Millennials are smart about money. Many budget, save for a house deposit, and cut their spending to combat the rising cost of living. However, nearly 40% of millennials have no life insurance, and among those who do, many are underinsured. This is despite the fact that millennials are increasingly focused on financial goals and long-term financial security. So, why is this the case?

Millennials are smart about money, with nearly 68% budgeting and 44% saving for a house deposit

Millennials are often portrayed as careless spenders, but the data suggests otherwise. Nearly 68% of millennials budget, and 44% are saving for a house deposit, indicating a generation that is conscious about their finances. This is further supported by the fact that millennials are cutting down on expenses to combat the rising cost of living.

Millennials are actively working towards financial milestones, such as paying off student loans, saving for a down payment on a house, and building an emergency fund. They are also taking on more financial responsibilities, such as getting married, starting families, and buying homes. This highlights their awareness of financial planning and their commitment to long-term goals.

In addition to their financial prudence, millennials are also prioritizing their health. They understand the importance of investing in their health and well-being, which is reflected in their low-risk customer status for life insurance. By taking advantage of their youth and health, millennials can secure lower insurance premiums.

Moreover, millennials are not just focused on the present; they are also thinking about their future. This is evident in their interest in retirement planning and their willingness to invest in life insurance to protect their loved ones financially. They recognize the importance of having a safety net, especially when it comes to their family's future.

Overall, millennials are demonstrating financial savvy by budgeting, saving, and investing in their future. They are taking control of their finances and making informed decisions to secure their financial stability.

Life insurance can help millennials protect their income, clear debt, and look after loved ones

Life insurance is a valuable tool that can help millennials protect their income, clear debt, and provide financial security for their loved ones. Here's how:

Protecting Income

Millennials often face financial challenges such as student loans, mortgages, and other debts. Life insurance can provide a safety net by offering a death benefit that can replace lost income for beneficiaries. This ensures that their loved ones can maintain their standard of living even if the primary wage earner passes away.

Clearing Debt

Life insurance can also help clear outstanding debts. The death benefit from a life insurance policy can be used to pay off any existing debts, such as mortgages, credit card balances, or student loans. This can relieve financial burdens and provide stability for those left behind.

Looking After Loved Ones

Millennials can use life insurance to look after their loved ones in several ways. The death benefit can be used to cover final expenses, such as funeral or burial costs, ensuring that families don't have to bear additional financial burdens during a difficult time. Additionally, life insurance can provide a tax-free inheritance for beneficiaries, helping to secure their financial future.

Furthermore, life insurance can also protect against the financial risks associated with long-term care. As the population ages, the costs of long-term care are becoming increasingly unaffordable, and government aid often falls short of covering these expenses. Life insurance can provide additional financial security to ensure that millennials can support their aging parents or relatives without sacrificing their own financial stability.

While some millennials may be hesitant to purchase life insurance due to cost concerns or a lack of understanding, it is a valuable tool for protecting their income, clearing debt, and providing for their loved ones. By seeking out trusted partners and leveraging technology, millennials can navigate the process of securing their financial future.

It's not just about death—it's also about living benefits like income protection and trauma cover

Life insurance is not just about death—it's also about living benefits like income protection and trauma cover. Here are some reasons why millennials should consider life insurance early on:

Financial Protection for Loved Ones

Even if you don't have kids, life insurance can be beneficial. It can cover debts like student loans, car loans, or a mortgage that might otherwise fall to your family. In the event of an untimely death, your life insurance policy can provide the financial support they need to cover living expenses, medical bills, or other financial obligations.

Income Protection

Millennials are more likely to work in gig or contract jobs, which don't offer built-in financial safety nets like paid sick leave. Income protection insurance helps keep your financial goals on track, covering up to 75% of your income if you can't work due to sickness or injury. You will receive regular payments to replace some of your income if you suffer an illness or injury and can no longer work.

Trauma Cover

Trauma insurance, also called 'critical illness' or 'recovery insurance', pays a lump sum if you suffer a critical illness or serious injury. This includes cancer, a heart condition, major head injury, or stroke. Trauma insurance can be used to help pay for out-of-pocket medical costs, living expenses while you're unable to work, the cost of therapy, nursing care, and special transport, changes to housing if needed, and paying back debt, such as a mortgage.

Peace of Mind

Life insurance provides financial stability and peace of mind, allowing you to enjoy the holidays knowing your finances are secure, no matter what life throws your way.

Flexibility

With options to pay via superannuation or cash flow, it's easier to fit insurance into your budget.

Lower Premiums

Purchasing life insurance early ensures lower premiums and long-term financial growth. When you're younger, you're generally healthier, which makes you less risky to insure. Insurance companies often reward this lower risk with lower premiums.

Millennials are more likely to have high-risk jobs without financial safety nets

Millennials are facing a unique set of challenges when it comes to financial security and planning for the future. Despite being better educated, they earn less on average than their parents did at the same age. This is due in part to the rise of the gig economy and contract jobs, which often lack the financial safety nets of traditional employment, such as paid sick leave. As a result, millennials are more likely to work multiple jobs or longer hours just to get by.

The contingent nature of many of these jobs means unpredictable work schedules, making it difficult for young workers to balance their work lives with other commitments such as education, training, or childcare. This situation is even more challenging for young workers of colour, who make up a significant proportion of the contingent workforce.

In addition, the rising cost of living is leaving many millennials with little room to build savings. Without a financial buffer, an unexpected illness or injury could easily derail their plans. This is where life insurance can help. Income protection insurance, for example, can cover up to 75% of lost income if a policyholder is unable to work due to illness or injury.

However, nearly 40% of millennials have no life insurance, and many of those who do are underinsured. This is partly due to the misconception that life insurance is too expensive. In reality, there are many affordable options, such as paying through superannuation. Starting early also means locking in cheaper premiums and protecting yourself before life gets more complicated.

Life insurance can also help millennials tackle debt. Many are juggling financial commitments such as student loans, credit card debt, and mortgages. In the event of an untimely death, life insurance can help cover these debts so that the policyholder's family or partner doesn't have to.

In conclusion, while millennials may be more likely to have high-risk jobs without financial safety nets, life insurance can provide a much-needed safety net for the future. It can offer financial protection, help with debt, and provide peace of mind, allowing millennials to focus on their goals and plan for the future with greater security and flexibility.

Life insurance can help tackle debt, including mortgages and credit cards

Life insurance can be a valuable tool for tackling debt, including mortgages and credit cards. Here's how it can help:

Peace of Mind for You and Your Loved Ones

Life insurance provides financial stability and peace of mind by acting as a safety net for unexpected events. It ensures that your loved ones won't be burdened by your debts in the event of your untimely death. This is especially important if you share financial responsibilities with a partner or have a family dependent on your income.

Protection Against Various Types of Debt

Life insurance can help cover a range of debts, including mortgages, credit cards, and personal loans. If you have a cosigner or joint owner on your debt, such as a mortgage or loan, life insurance can protect them from bearing the full burden of the debt. Even if you don't have shared financial responsibilities, life insurance can help pay off your debts, allowing your estate to be passed on to your heirs without these financial liabilities.

Flexibility in Coverage Options

When it comes to life insurance, you have options to choose from. Term life insurance is typically sufficient for most families and is ideal for covering specific debts over a set period, such as a mortgage. On the other hand, permanent life insurance offers lifelong coverage and includes a cash value component that can be used to pay off debts or for other financial needs.

Affordable Premiums for Millennials

Millennials, in particular, can benefit from affordable life insurance premiums by starting early. By purchasing life insurance in their 20s or 30s, millennials can lock in lower premium rates, as age and health are significant factors in determining insurance costs. This not only secures their financial future but also frees up resources for other financial goals, such as saving for a house or starting a family.

Living Benefits and Financial Protection

Life insurance isn't just about paying out after your death; it also offers living benefits. Income protection, Total Permanent Disability (TPD), and trauma cover can provide financial protection if you're unable to work due to illness or injury. This is especially relevant for millennials, who are more likely to work in gig or contract jobs that don't offer built-in financial safety nets like paid sick leave.

In conclusion, life insurance can be a powerful tool for millennials and others seeking to tackle debt, including mortgages and credit cards. It provides financial stability, flexibility, and peace of mind, ensuring that unexpected events don't derail your financial goals and aspirations.

Frequently asked questions