Life Insurance: A Millennial's Guide To Getting Covered

Millennials are increasingly focused on financial goals, such as paying off student loans, saving for a house deposit, and building an emergency fund. However, nearly 40% of millennials have no life insurance, and many who do are underinsured. Life insurance is often overlooked, but it is a critical component of long-term financial security. By purchasing life insurance early, millennials can ensure lower premiums and long-term financial growth. Life insurance offers financial protection, helps tackle debt, and provides valuable support for loved ones. It is a tool for independence, offering a safety net if illness or injury prevents work. With rising living costs, income protection through life insurance can keep financial goals on track.

Millennials are more likely to work in gig jobs without financial safety nets

Millennials in gig jobs often lack the financial safety nets typically provided by full-time employment, such as paid sick leave. This means that getting sick can result in a loss of income, and they bear the full risk of running a business, including branding, marketing, and bookkeeping responsibilities. Additionally, they may face challenges when it comes to tax deductions, as working for multiple employers can result in being bumped into a higher tax bracket.

The lack of financial stability in gig jobs can make decision-making about the future more difficult for millennials. They may struggle with saving for the future due to unpredictable income and the immediate financial demands of the present. This is further exacerbated by the financial challenges unique to the millennial generation, such as record-high tuition fees, soaring living costs, and a lack of reliable and well-paying jobs.

However, the gig economy does offer certain benefits that appeal to millennials. It provides the freedom to manage one's own time, explore different work methods, and contribute meaningfully to their community. It also offers the satisfaction of owning one's work and building one's own business.

In conclusion, while millennials in gig jobs may face financial instability and a lack of safety nets, the gig economy also presents opportunities for autonomy, flexibility, and pursuing one's passions.

Life insurance can help tackle debt

Millennials are smart about money. They budget, save for a house deposit, and cut down on spending to combat the rising cost of living. However, nearly 40% of millennials have no life insurance, and many of those who do are underinsured. This is despite the fact that life insurance can be a crucial tool for tackling debt.

It Covers Loans and Debts

Millennials often juggle multiple financial commitments, such as student loans, car payments, credit card debts, and mortgages. Life insurance ensures that, in the event of an unexpected death, these debts are settled, and family members or partners are not burdened with them.

It Provides Financial Security for Your Family

Life insurance can cover daily expenses and long-term goals, ensuring that loved ones are financially taken care of if something unexpected happens. It can help with childcare costs, education fees, and support for parents or a spouse.

It Offers Living Benefits

Life insurance isn't just about a payout after death. With options like income protection, Total Permanent Disability (TPD), and trauma cover, it offers 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 without built-in financial safety nets.

It Helps with Estate Planning

Life insurance can be used to cover estate taxes, ensuring that more of your wealth is passed on to heirs without burdening them with financial liabilities. Naming beneficiaries also ensures that loved ones receive benefits directly, bypassing the probate process.

It Provides Peace of Mind

Life insurance gives you the assurance that, no matter what happens, your family will be taken care of. You can focus on enjoying life, knowing that the future is secure.

It Can Be Used as a Safety Net for Medical Emergencies

Many life insurance policies offer additional benefits, or riders, that cover critical illnesses. This can include cancer, stroke, or other major conditions, providing financial support for treatment costs, hospital bills, and recovery.

In addition to these benefits, purchasing life insurance early in life ensures lower premiums and long-term financial growth. Life insurance is a valuable tool for millennials to manage their debt and protect their financial future.

It can help you save for the future

Life insurance is a great way to save for the future, offering a range of benefits that can help you achieve your financial goals. Here are some reasons why life insurance can be a valuable tool for saving and financial planning:

Financial Protection:

Life insurance provides financial stability and peace of mind. It serves as a safety net, ensuring that your loved ones are taken care of financially if something unexpected happens to you. This includes covering living expenses, medical bills, and other financial obligations. By investing in a life insurance policy, you can rest assured that your family will not be burdened with financial difficulties in your absence.

Lower Premiums:

Purchasing life insurance early in life, especially during your 20s or early 30s, can secure lower premiums. Age and health are significant factors in determining insurance rates. The younger and healthier you are, the less risky you are to insure, resulting in lower premiums. By locking in a policy early, you can benefit from affordable coverage that remains constant as you age, even if your health status changes.

Long-Term Financial Growth:

Life insurance, particularly permanent life insurance, can aid in long-term financial growth. These policies often include a cash value component that accumulates over time. This growing cash value can be a valuable financial asset, offering low-interest loans or collateral for loans. It can also be used for significant expenses, such as a down payment on a home, starting a business, or funding your children's education.

Protection Against Future Health Issues:

Securing life insurance early protects you against unforeseen health issues that may arise as you age. Medical conditions, such as high blood pressure, diabetes, or heart disease, can develop over time and impact the cost and availability of life insurance. By purchasing coverage when you are young and healthy, you can lock in lower premiums and guarantee coverage regardless of future health changes.

Financial Security for Major Life Events:

Life insurance becomes increasingly important as you navigate through significant life milestones, such as marriage, buying a home, or starting a family. These events often bring increased financial responsibilities, and life insurance ensures that your loved ones are financially secure if something happens to you. It can help cover shared debts, mortgages, or the costs of raising children, providing a safety net during these pivotal moments in your life.

Flexibility and Customization:

Life insurance policies offer flexibility to meet your changing needs over time. You can start with a term life insurance policy, which is affordable and provides coverage during your early working years. As your financial situation evolves, you can consider converting to a permanent life insurance policy or adding riders for additional benefits, such as critical illness coverage. This adaptability ensures that your life insurance remains relevant and provides the necessary protection throughout your life.

It can be used to build generational wealth

Life insurance is a great way to build generational wealth, and there are several ways to go about it.

Firstly, life insurance can be used to create a financial safety net for your family. It can cover debts, daily expenses, and long-term goals, ensuring your loved ones are financially secure. This is especially important if you have dependents or someone who relies on you. By allocating a portion of your income to a life insurance policy, you can rest assured that your family will be taken care of even if something unexpected happens to you.

Secondly, life insurance can help with estate planning and wealth transfer. By designating your children or grandchildren as beneficiaries of your policy, you can ensure that your wealth is distributed according to your wishes. Life insurance proceeds are generally free of income tax for the beneficiary, and the funds are typically paid directly to them, bypassing the probate process and avoiding potential delays and legal expenses. This also allows for greater flexibility in updating beneficiaries as your circumstances change, ensuring a fair distribution of wealth.

Thirdly, life insurance can be used to equalize inheritance among loved ones. By changing beneficiaries as life circumstances evolve, you can use life insurance to ensure a fair distribution of assets among siblings or other family members. This can be particularly useful if you have assets that are challenging to divide, reducing potential conflicts within the family.

Additionally, life insurance can be a valuable tool for parents of children with special needs. By setting up a trust and naming a trustee to oversee asset distribution, you can ensure that your child's needs are taken care of even after you're gone. This provides peace of mind and guarantees that your child will be cared for financially.

Lastly, certain types of life insurance, such as permanent life insurance, can offer both income replacement during your working years and a means of guaranteeing long-term family wealth. Permanent life insurance provides lifetime coverage and includes a cash value component that grows over time. This cash value can be borrowed against, used as collateral for loans, or withdrawn for significant expenses, such as education or starting a business. By starting early and taking advantage of compound interest, you can maximize the growth of the cash value, resulting in a substantial sum by the time you reach retirement age. This not only helps you build wealth during your lifetime but also ensures that your loved ones can benefit from it after you're gone.

It can provide peace of mind

Life insurance is often overlooked by millennials, who may be more focused on immediate financial goals, such as paying off student loans, saving for a house deposit, or building an emergency fund. However, life insurance can provide peace of mind in several ways.

Firstly, it offers financial protection for loved ones in the event of the policyholder's passing. This is especially important for millennials who may be supporting ageing parents, sharing financial responsibilities with siblings, or have a spouse or children who depend on their income. Life insurance ensures that, even in the policyholder's absence, their loved ones will be taken care of financially. It can cover living expenses, medical bills, and other financial obligations, providing a valuable safety net for those left behind.

Secondly, life insurance can help tackle debt. Millennials often juggle multiple financial commitments, such as student loans, credit card debt, and mortgages. Life insurance can step in to help cover these debts, ensuring they are not passed on to family members or partners. This gives peace of mind, knowing that loved ones will not be burdened by financial liabilities.

Thirdly, life insurance provides financial stability and flexibility. It can protect your income, ensuring that your financial goals stay on track even if you are unable to work due to illness or injury. With options like income protection, Total Permanent Disability (TPD) cover, and trauma cover, life insurance offers living benefits that safeguard your income and help maintain your financial independence.

Finally, life insurance provides peace of mind by allowing you to plan for the future. By securing life insurance early, you can lock in lower premium rates, protecting yourself and your loved ones before life gets more complicated and expensive. It gives you the confidence to know that, no matter what surprises or curveballs life throws your way, you and your family will be financially secure. This peace of mind extends beyond just financial matters; it allows you to fully enjoy the present, knowing that you are prepared for whatever the future holds.

Frequently asked questions