Life insurance acts as an important financial safeguard for many, yet young people often view it as a tool just meant for older people and don’t see its application in their own financial lives. Millennials – anyone born from 1981 – 1996 – simply aren’t taking out life insurance policies, even though studies show that only about 10 percent of young people have enough savings to cover their debts if they should die unexpectedly. This gap in coverage leaves their families at risk of having to pay off unexpected debts, like student loans.
Most financial experts recommend that younger adults should prioritize getting life insurance, even if it’s just enough to cover a year or two of their salaries. Sometimes, life insurance is available through work, though these policies won’t follow you if you change employment, which many young people do every few years. For this reason, it is more advantageous to look into term life insurance, which is a policy that covers you for a certain amount of time. Here are three things to know about it:
You Have a Multitude of Options
Even if you’re young and don’t have many financial obligations, there are types of term life insurance policies to suit your needs. You can choose the level of coverage and the time period, and you can usually choose whether to pay your premiums monthly, quarterly or annually, too.
It Won’t Break the Budget
Many young people are still paying off student loans or saving for home purchases, so they avoid even exploring life insurance options because they believe it to be too expensive. However, a moderately healthy person in his twenties can usually get a $100,000 term policy for the price of a few fancy coffees each month.
Young People Can Greatly Benefit from Life Insurance
It may seem counterintuitive, but young people have the most to gain from life insurance. Term policies usually require a physical in order to set your rate, so young and relatively healthy people can actually get much more bang for their buck than Baby Boomers or Gen Xers. Getting a policy now – as opposed to waiting a decade – can save you substantial cash over the long-term.
Life insurance has much to offer young people. If you don’t have a policy yet, start investigating your options and begin safeguarding your family’s financial future today.
Image via Flickr/Jeff Eucker
