If you were born between 1982-1994, that makes you a Millennial. You’re in your 20’s and 30’s, getting out into the world, and discovering what your work and life is going to be all about. You’re making plans, and you’re likely excited about the future. But odds are, what you’re not doing is thinking too hard about life insurance. Why should you, you’re young!
But is now the right time for you to start considering life insurance? The concept itself is easy enough to understand. You’ll pay regular premiums. After you’re gone, your heirs will end up receiving a lump sum of money. There are two different kinds of life insurance.
- Whole life stays in effect for your entire lifetime, as long as you keep making the premium payments.
- Term life covers you for a specific period of time, such as 10-20 years. It’s usually cheaper than whole life insurance.
So now that you know what life insurance is, why is it something worth thinking about? First, when we’re in our 20’s and 30’s, we’re all about finding a job that hopefully becomes a career, finding a place to live that makes you happy, and being with someone that makes you happier. Those are decisions that are all about you, and there’s nothing wrong with that. But life insurance isn’t about you. It’s about the people in your life that you’ll leave behind, and about you making sure they have some degree of stability. For example:
- What if you have family members with special needs? For their entire lives, they will require medical treatment and other kinds of ongoing care. The cost of this care can become enormously expensive.
- It may be hard to imagine now, but if you have children at some point, you’ll want to make sure they have the financial stability to not only continue living comfortably but also get a good college education.
- Maybe you’ve got the mind and soul of an entrepreneur, and you’re going into business with a friend and a million dollar idea. In the event of the sudden death or disability of you or another team member, life insurance can keep your business from imploding.
- Suppose you’re going into an industry where you’re likely to be earning a lot of money? Life insurance is an extremely important component when it comes to estate planning.
Now that you know what life insurance is and why it can be important, it all must mean that we think all Millennials should immediately sign up for life insurance policies, right? Well…not necessarily. Not everything is for everybody, and life insurance is no different. It might not be necessary for the following reasons.
- If you’re young, you have no dependants, and you’re single, life insurance might not be useful just yet.
- Some insurance brokers view life insurance as an investment strategy. Long term investing is smart, but there are better ways to do it, such as a 401(k), an IRA or Roth IRA plan. Make the most of those first.
- Other brokers can use high-pressure tactics to try and make a sale, whether or not it makes logical sense. Remember that life insurance is a tool, and it should be used to fix the right problems. Never let anyone pressure you into a sale unless you have a strong understanding of what it will cost you and how you’ll benefit.