Why Millennials Need to Start Thinking About Life Insurance Yesterday!

“I am young and healthy, why do I need life insurance? It is just another expense I can’t afford” 

This is usually what you hear from most millennials when they are asked about life insurance.

And, fair enough. After all, in today’s tough economy, with high unemployment rates, rising inflation, and low incomes, buying life insurance may be low on the priority list for most millennials.

However, that doesn’t mean that it isn’t important or affordable. 

Buying life insurance early can have many advantages including lower premium costs, access to policy loans, and more time to accumulate cash value on permanent life insurance policies.

Here are five reasons millennials need to start thinking about life insurance yesterday; to help safeguard and grow their tomorrow.

5 Reasons Millennials Should Buy Life Insurance

There are two types of life insurance policies in Canada, term life insurance and permanent life insurance. Both policies offer distinct advantages to millennials and here are five reasons why. 

Life Insurance Premiums Increase with Age

Many millennials believe life insurance is far more expensive than it is. In reality, the affordability of term and permanent life insurance policies is at its highest when you are young and healthy. 

For example, as a 25-year-old, if you were to apply for term life insurance today, your monthly premium would be as low as $20-$30 a month. Whereas, if you were to apply for the same policy when you are 45, you would pay $160 or more for the same policy.

Permanent life insurance policies are even more beneficial the earlier you start. These policies offer a cash value component that can be used as a lucrative investment vehicle for retirement savings. 

The earlier you start, the more cash value you accumulate which can all be withdrawn tax-free before the age of 60, ensuring a financially healthy retirement.

The Younger You Are The Easier it is to Obtain Life Insurance

It is also much easier to get life insurance as a millennial. 

As you are likely healthy with no medical complications there is little risk for the insurer which means you will get approval faster and there will likely be much less paperwork required on your part.

The older you get the more difficult the approval process becomes. Medical complications, family history, line of work, lifestyle, and other factors have to be accounted for to assess risk and provide a premium quote by the insurer.   

Protects Co-Signer of Your Student Loan

As a millennial, you are likely already in student debt or going to be soon. This long-term debt can take years to pay off and if you were to pass away unexpectedly your student debt wouldn’t just disappear. 

Instead, the remaining debt will be passed on to your co-signer, who often would be your parents or a family member. Taking out even a small life insurance policy can help protect the co-signer from bearing the burden of student debt. The death benefit paid out can give them the money they need to pay off student loans and other outstanding debts. 

An Essential Tool for Financial Planning

A life insurance policy offers more than just financial protection for your dependents. It is also an essential tool for financial planning.

Having a life insurance policy in place can provide tax benefits, and if it is attached to an estate or trust, it can also ensure a quick and smooth transition of wealth, after you are gone.   

Offers Death & Living Benefits

Life insurance doesn’t only provide death benefits but living benefits as well. 

The cash benefit of a life insurance policy can be used while you are still alive, through policy loans. These loans can help you buy your first home, pay off student debt, cover wedding costs, or manage unexpected expenses. 

The cash value of a permanent life insurance policy can also be used to supplement your retirement income allowing you to live out your golden years in comfort and without any financial duress.

What Life Insurance Policy Should You Buy?

As a millennial, what insurance policy should you look to buy?

While both policies offer essential benefits, investing in a permanent life insurance policy at an early age can be extremely beneficial for millennials, especially, in the long term. 

Apart from providing financial security to loved ones, a permanent life insurance policy can accumulate wealth tax-free through its cash value component. Also, as the cost of premiums is fixed, it may seem like you are paying more early, but 10-20 years down the line your premium cost would be a fraction of what a similar policy will likely cost at that time.

However, what policy is best for you, largely depends on your personal and financial circumstances, lifestyle, and goals. 

Thus, before buying a life insurance policy consult a trusted insurance broker such as Pat McIver at McIver Insurance Inc.

We specialize in all types of insurance coverage and offer tailored solutions to meet the needs of businesses and individuals in Nova Scotia and across Canada. Call us today at 1-902-220-3279 to learn more!

FAQs

Q) What is the average cost of life insurance for millennials in Canada?

The average cost of a 10-year term life insurance policy for a healthy 30-year-old in Canada is around $13 per month for every $100,000 of coverage. Whereas, the average cost of a permanent life insurance policy for a healthy 30-year-old is about $65-$75 a month for every $100,000 of coverage.

Q) Should you consider life insurance if you don’t have dependents?

Yes, even if you don’t have dependents right now you may get married or have children later in life. Also, life insurance is not only for your loved ones but also for yourself. It can help you pay off mortgage payments, student loans, funeral costs, and credit card debt.

Q) How do you choose the right life insurance policy?

To choose the best life insurance policy for your specific needs and future goals, consult with a financial advisor and/or insurance broker. These professionals can best guide you on what life insurance policy would be best and can help you find the best deal.