Why Millennials May Need Life Insurance Now More than Ever
It’s easy to feel invincible when you’re young, healthy and have a steady paycheck. After all, the chances of something catastrophic happening to you are pretty low, right?
Well, the fact is that even if you’re in the best shape of your life and at the top of your earning potential, there’s a lot that you don’t want to leave to chance. Especially considering that these days, young adults are facing a mounting number of unique financial challenges — from global economic shifts to student loan debt, family planning, and figuring out how to save for retirement.
What’s more, you may be among the many millennials who have opted to put important financial considerations like life insurance on the back burner. To provide some context, while millennials have the highest savings rate among any generation, they have blind spots when it comes to what really providing protection looks like. 1
What is life insurance—and why does it matter now?
While it’s easy to justify putting off life insurance when you’re young, the truth of the matter is that major events are one of life’s few consistencies. The unexpected can—and does—happen to young people, and the last thing you want to do is put yourself in a position where you’re starting a family or purchasing a home without a game plan for replacement income if the worst should happen.
Therefore, it’s important to ask yourself:
If you pass away, how will your family cover expenses without your income?
Do you have the resources to provide for your family if you become permanently disabled?
Does your family have the financial resources to pay for your funeral?
Will you leave behind any debts they’ll have to take on?
Do you have access to cash that could potentially be leveraged in emergencies?
Fortunately, these important issues can be resolved by taking a “protection-first” approach to your income. Beyond paying for immediate needs should you pass on, life insurance can also help you provide for your future self, as some policies give you access to built-in cash value that can help you cover emergencies, or even to help fund educational expenses or your retirement.2,3
Coming to terms: Life insurance gets flexible.
Life insurance helps protect you by providing a tax-free death benefit to your loved ones after you pass away. Some types of life insurance also build up a cash value that allows you to pay for larger expenses without tapping into your savings or retirement accounts.
There are two main types of life insurance: term life insurance and whole life insurance. As its name indicates, whole life insurance provides coverage for your whole life, and provides features like cash value that can help you pay for education or fund your retirement.
Characterized by lower premiums and coverage that lasts for a specified amount of time—like 10, 20, or 30 years—term life insurance has become a common, affordable and flexible choice among millennials looking to get coverage, but who may not want to commit to whole life insurance yet. On some term life products, unique riders may be available, such as the ability to donate an extra 1 percent of the death benefit—over and above the amount paid to the designated beneficiaries—to any qualified 501(c) (3) charity of the policy owner’s choosing.4
While you may be wondering which type of life insurance is right for your situation, the good news is that many types of term life insurance policies can potentially be converted to whole life insurance if and when it makes sense to do so As you explore the options, a financial professional can also help you determine which type of coverage is right for you based on your situation.
A closer look at coverage.
Determining the right amount of coverage for yourself typically depends on certain factors, including your current debt, potential earning power, net worth, and who depends on you. The goal of life insurance is to protect your potential earnings over time. Think of it this way: if you’re the breadwinner of your family and you have dependents, it’s critical that you’re prepared to provide income in the event you pass away. So the younger you are, the more years of cash flow coverage you may want to consider.
Another item to consider is that the younger you are when you purchase life insurance, the less you may pay—especially if you’re in good health without preexisting conditions. Just one of the many reasons to explore life insurance now instead of waiting.
Protection for financial confidence.
While things like life insurance can feel complex, preparing for life’s major needs—through planning for protections like life insurance or saving for retirement—are the best ways to set yourself and your family up for a stable future. This helps ensure that when something happens, like a job loss, disability, or death, you and your loved ones will have the resources needed.
Brought to you by The Guardian Network © 2020. The Guardian Life Insurance Company of America®, New York, NY
2020-105772 Exp 7/2022
1 Millennials and money: Understanding what drives financial confidence, 2018
2,3 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
4 The Charitable Benefit rider is available on Guardian Level Term policies. Up to a maximum of $100,000. Subject to state availability. Guardian Level Term is issued by The Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware corporation whose principal place of business is 10 Hudson Yards, New York, NY 10001. 1 888 GUARDIAN (1 888 482 7342). Policy form numbers: GLT 10, 15, 20, 30: 20-GLT Charitable Benefit Rider: 20-CBR GIAC