Think you’re too young to need life insurance? Think again! Life insurance is not exclusively for the older generation. In fact, different age groups can benefit from safeguarding the financial future of their loved ones.
The Millennial demographic are those who were born between 1981 and 1996, and currently are the largest generation of people in Canada. Millennials are noted tech enthusiasts having grown up during the internet age.1 They are tech-savvy, ultra-connected, and many cannot imagine a world without their devices, such as their laptops or cell phones. They have also been raised during the time of social media, which has facilitated a new way of forming and maintaining connections online.
When it comes to personal finance, Millennials are a generation that is much more open and comfortable talking about money than their parents (Gen Xers). Having this dialogue with others helps them make better financial decisions and set personal finance goals. Millennials are also big financial planners; this means they may recognize the importance of financial protection and life insurance.
Reasons Why Millennials Need Life Insurance
Millennials may be at different stages of their life. Many are young professionals, focused on their careers and living a busy lifestyle. Others could be starting a new family and may have purchased their first home.
Millennials between the ages of 25 and 34 have an average after-tax income of $66,500, more than a $15,000 increase from when Gen Xers were in this same age bracket. While Millennials may have higher after-tax incomes than Gen Xers, they also carry more debt. As Millennials continue to invest in their lives, the need for life insurance protection increases, to safeguard their loved ones from assuming this debt.
Millennials are the most educated generation; about 70% of those between 30 and 34 hold a post-secondary certificate, diploma or degree compared to Gen Xers at the same age. While Millennials hold a higher education, they carry a high amount of student debt.
Post-secondary school costs are on the rise in Canada. The average cost of a post-secondary education in Canada is $19,498.75.5 This sum accounts for many of the hidden costs post-secondary students incur. Beyond tuition, they may have spent additionally on rent, groceries, textbooks, extracurriculars and other needs. Over 20% of bachelor’s degree holders graduate with over $25,000 in debt. Investing in a life insurance policy can prevent this exorbitant student debt from being passed down to a family member in the event of an untimely death.
Millennials are entering the housing market at the same rate as Gen Xers but are taking on larger mortgages. House prices have been on a steady incline, and with many Millennials seeking larger homes to accommodate their young families, they’re taking on hefty mortgages to pay for those sizable house price tags. The median mortgage debt on a first home was $117,500 for Gen Xers and $218,000 for Millennials.
While Millennials have higher assets and higher net worth on average than their Gen X counterparts, they also carry more debt. This emphasizes the need for Millennials to safeguard loved ones from assuming these large outstanding debts such as post-secondary school costs or mortgages. If they were to pass away, these debts would be left behind for family members to cover. Life insurance provides peace of mind that loved ones will be financially protected and won’t be burdened with outstanding debts and bills.
The Benefits of Applying for Life Insurance as a Millennial
As a Millennial, a key benefit of being young when you apply for life insurance is that you have the opportunity to benefit from lower rates since you are more likely to be in good health. Life insurance providers will take into consideration your personal health as well as your family health history. As your family ages, there is an increased risk that someone in your family may be diagnosed with a disease/illness. This will inform the life insurance provider that you may be at a higher risk of getting a similar disease/illness which may impact your rate. Therefore, the earlier you apply for life insurance, the more likely you are to benefit from a low premium.
Millennials can also benefit from critical illness insurance. With people being diagnosed with disease/illness earlier in their lives, having financial protection at a time you need it most can make a big difference. For those in this situation, critical illness insurance can provide a lump-sum payment – a living benefit which can be spent on anything they want and provide financial relief during a challenging time. Although, like life insurance, it’s easier to qualify for this type of insurance when a person is younger and healthier. Millennials can take advantage of lower rates since as you get older your risk of a diagnosis increases and premiums rise as a result.
Life Insurance Options for Millennials
Permanent or term life insurance
Millennials can choose between permanent life insurance or term life insurance plans. Permanent life insurance provides permanent protection; coverage until you pass away. Alternatively, term life insurance offers coverage for a fixed term such as 10, 20, or 25 years, or for any other period that is defined in the policy. At the end of the term period, the insurance expires, however there may be an option to renew or convert to a permanent plan.
No medical VS. Traditional Life Insurance
Millennials lead busy and active lifestyles. As a result, they want a quick and easy process to apply for life insurance. No medical life insurance can be a great choice since, depending on the life insurance provider, the application process is hassle-free and straightforward compared to traditional life insurance.
There are no medical tests or exams involved; simply answer some health-related questions. The application process can take up to 15-20 minutes and can conveniently be done without leaving your home either online or by phone with a policy issued electronically within a few days. Traditional life insurance, in contrast, typically requires a lengthy application process and medical exam, and can take many weeks and even months to be issued.
This makes no medical life insurance a reliable, fast, and convenient option for Millennials looking for coverage that won’t break the bank.
Are you a Millennial interested in investing in life insurance? Start by researching and finding a life insurance provider that offers a selection of no medical life insurance plans. Compare their application process and coverage amounts to see which fits your unique needs best.
Is life insurance right for you?
There are important reasons why Millennials may need and benefit from getting life insurance. Considering the burden of debt from post-secondary schooling and large mortgages, Millennials need to protect their loved ones from assuming this debt should they pass away. Planning for the future with life insurance provides peace of mind that loved ones are financially protected.