Soon to be the largest generation in the United States, according to Pew Research Center, millennials continue to move into the workplace and make up a considerable portion of the consumer base and economy, and Gen Z is following quickly behind.
In addition to having different banking and investment behavior than Generation X and baby boomers, millennials are impacting the insurance industry and how insurance products are marketed. Millennials and Gen Z individuals do not feel as knowledgeable about life insurance compared to other generations. Insurance trade group LIMRA found that half of the millennials overestimate the cost of life insurance coverage.
Younger generations need to know the facts about life insurance to make informed financial decisions. They should know how young policyholders can lock in low premiums and how term life insurance offers higher coverage than employer-provided life insurance. Here are some essential facts about life insurance that millennials and Gen Z should know.
Younger policyholders can lock in lower premiums
Younger policyholders can get a lower life insurance premium than older ones. Life insurance companies generally see younger and healthier people as less risk to insure. As a person gets older and if they develop any health issues, the rates for a life insurance policy will be higher. A 30-year-old male may be able to get a 20-year, $500,000 term life policy for as low as $35 a month. If that same 30-year-old male waits until they’re 40 to purchase the same policy, it can potentially cost around $47 a month.
On average, life insurance premium amounts increase around 8% to 10% for every year of age. Once a millennial or Gen Z individual purchases a policy, the premium will remain the same cost for the full length of the policy. While whole life insurance is more expensive, it can also come at a lower cost when purchased at a younger age.
Term life insurance offers higher coverage than employer-provided life insurance
In some cases, Gen Z and millennial workers may have the option of getting life insurance from their employer. The amount of coverage is generally about a year’s salary. In contrast, term life insurance offers coverage amounts as high as $1,000,000. Millennial and Gen Z workers also need to consider that their next employer might not offer life insurance and that employer-sponsored coverage is typically not portable. In contrast, term life insurance policies can last anywhere from a year to up to 3 0 years.
Whole life insurance features a cash value
One of the benefits that millennial and Gen Z individuals can gain from whole life insurance is the cash value. It’s the savings portion of a whole life policy. A portion of every premium goes toward building up the cash value. The policyholder can withdraw money, borrow against the cash value, or surrender the policy and obtain all of the cash value minus fees. Withdrawals are generally tax-free unless more money is withdrawn than the amount of premiums paid. Millennials and Gen Z individuals should also be aware that withdrawing from the cash value can reduce the death benefit paid out to their beneficiaries. Knowing all the facts about life insurance can help millennials and Gen Z choose a policy that best suits their needs.
Fidelity Life offers term life policies for millennials and makes it easier for people to get coverage. Life insurance shoppers can discuss their options with a licensed agent or shop online for life insurance quotes. In addition, Fidelity Life can help shoppers find, apply and purchase a policy that’s right for them.