While millennials haven’t always been interested in life insurance, the pandemic has shifted their thinking. In the 2021 Insurance Barometer Study, 45% of millennials are now more likely to buy life insurance because of the pandemic. Initial findings show younger Americans are least likely to be insured but most likely to be interested in purchasing life insurance within the next year.
Some policy options millennials should consider include term life insurance and whole life insurance. In addition, young life insurance shoppers should understand why life insurance is important and what different policy options offer.
Why life insurance is important
One of the main reasons life insurance is important is the financial protection it can offer an individual’s family. On average, millennials only have about $51,000 in personal savings. It may not be enough to cover funeral expenses and remaining debt, such as a car loan or a mortgage. Life insurance offers policies that provide coverage amounts as high as $1,000,000, enough to cover the loss of a policyholder’s income for a few years or more. The benefit is paid directly to the beneficiary, who can use it however they think is best. The living spouse or family member can continue to pay for living expenses such as housing, food, health care, and childcare. Beyond supporting the policyholder’s family, depending on the type of life insurance chosen, it could also help support the policyholder while they’re alive.
Term life insurance
Term life insurance offers protection for a specific length of time. If the policyholder dies within the policy’s timeframe, the death benefit is paid directly to the beneficiary. The policyholder’s beneficiary can use the money to pay for any remaining debt and daily living expenses. It can help in replacing the loss of income of a young parent. The cost of a term life insurance premium is typically low for young and healthy people. For example,a 35-year-old millennial non-smoker can possibly get a 20-year term policy with a coverage of $250,000 for around $20 to $30 a month. The different types of term policies include level term, yearly renewable term, decreasing term, and return of premium life insurance.
Whole life insurance
Whole life insurance offers permanent protection for the life of the policyholder. This type of policy also features a savings component referred to as “cash value.” With each premium payment, a portion goes towards building the cash value. The policyholder can choose to borrow against the cash value or make a withdrawal. Policyholders should be aware that if the withdrawal exceeds the premium amount that’s been paid, it can be taxed as income. Withdrawals can also reduce the death benefit paid out to a beneficiary. In some cases, a whole life insurance policy can earn dividends. A dividend is a portion of an insurance company’s profits that gets paid to the policyholder.
Americans value life insurance more
Just 52% of American adults reported having life insurance coverage in 2021, but 73 million Americans (59%) said they need life insurance. In addition, about 29 million policyholders say they need to increase their current life insurance coverage, according to the LIMRA study.
The life insurance industry is working to help Americans find the best coverage, which can depend on each invididual’s financial situation.
COVID-19 Spurs Greater Interest in Life Insurance for Millennials
Despite the record-low life insurance ownership, Americans’ intent to purchase life insurance is at an all-time high. As a result, life insurance carriers and distributors seek to engage consumers who lack adequate life insurance coverage to protect their family’s financial futures.
Fidelity Life offers a variety of term life insurance for millennials and makes it easier to obtain coverage. Life insurance shoppers can discuss their options with an agent or shop for online life insurance quotes. Shoppers just need to answer a few questions and can be quickly matched with a policy that suits their needs.