The Millennial generation, typically defined as persons born between 1981 and 2000, is the largest living generation in American society. They represent over $200 billion of annual buying power and boast a membership of approximately 80 million people.1
Despite vast numbers and significant buying power, Millennials are currently the most uninsured generation, according to a survey from InsuranceQuotes.com. Their rates of life insurance ownership lag behind that of Baby Boomers and Generation X. Perhaps Millennials, who are generally viewed as skeptical, are not convinced that life insurance is a necessary and cost-effective part of an overall financial strategy. Many Millennials believe that they are too young, too healthy, or in too much debt to worry about life insurance. Well, that’s a myth that needs “busting” immediately.
Millennials need life insurance just like any other generation. If a person has debt, owns property, has children, helps take care of aging parents, or has anyone who depends on his or her income, that person should have life insurance coverage. And, despite what many people mistakenly believe, group life insurance coverage through an employer is often not sufficient.
Let’s take a look at some of the myths that Millennials may have about life insurance that keeps them from taking the important steps toward owning adequate coverage. You will see that Millennials may be in a better position to purchase life insurance coverage than any other generation.
Myth #1: “Life insurance costs too much”
While “costs too much” is certainly a relative phrase, term life insurance is one of the few purchases that costs lesstoday than 10 years ago. Very few consumers realize this fact. A recent survey conducted by LIMRA and the non-profit Life Happens foundation revealed that consumers believe a life insurance policy costs nearly three times its actual cost.
To show how premium prices have declined, compare the annual premiums for a 20-year term policy, with a $500,000 face amount, for a 40-year-old male, non-smoker, best class. The best rate for our example 40-year-old male in January of 1994 was $995 per year.2 If that same person wanted to purchase the same type of policy today, his premium could be as low as one-third of that cost.
Life insurance may be one of the best bargains Millennials can find today. Of course, cash flow can be problematic for the younger generation, but life insurance costs should be worked into the monthly budget just like any other expense.
Myth #2: “I’m too young for life insurance”
This myth has a certain irony to it. Younger clients may have a great need for life insurance if someone depends on them financially. And, the cost of an individual’s life insurance policy is determined by a number of key factors – one of those is age. With all other factors being equal, life insurance is less expensive for younger applicants than for older. Millennials have the opportunity to take advantage of the cost structure of life insurance by purchasing a policy at a younger age, before the policy becomes more “expensive.”
Lower ages mean lower premiums. It’s a great reason for Millennials to purchase life insurance – especially permanent life insurance – now, instead of later.
Myth #3: “I’m too healthy for life insurance”
Another factor in the cost of a life insurance policy is the applicant’s health. There is no doubt that life insurance premium costs favor the healthy. Much like the younger age factor, healthier applicants enjoy lower life insurance premium rates. So, the best time to purchase life insurance is when you’re healthy.
Chronic conditions such as diabetes, arthritis, and heart disease tend to develop as we age. Purchasing life insurance before the onset of illness and disease is both wise and cost effective. Even if the Millennial isn’t concerned about being stricken by illness and disease now, tragedy can strike at any time. Among people between the ages of 1-34, accidental injuries alone claim more lives than any other cause.3
While younger clients may feel that they’re strong, healthy and practically invincible, life insurance is still a necessary and important part of an overall financial strategy.
Myth #4: “I’m in too much debt for life insurance”
Debt can be a scary and intimidating fact of life for Millennials. Debt can also be a very important reason to have life insurance.
Many Millennials use loans as a means to pay for college tuition expenses. Unfortunately those loans don’t go away quickly as college graduates work to build careers and raise families. The lingering debt can even impact others such as spouses, partners and parents who may have cosigned on their children’s loans.
The death benefit of life insurance can help pay off debts and give those left behind a better opportunity to recover emotionally and financially from the untimely death of a loved one.
Customizing life insurance benefits
There are a variety of life insurance options that can fit a Millennial’s current and future needs.
Term insurance is of course designed to protect for a specific period of time, such as 10, 15 or 20 years, and many term policies can be renewed at higher rates at the end of the term period. Alternatively, permanent insurance provides lifetime protection and the ability to accumulate cash value on a tax-deferred basis. Unlike term insurance, a permanent insurance policy is designed to remain in force for the insured’s lifetime.
Permanent insurance allows purchasers to access the cash value of the policy during their lifetime for unexpected expenses or to potentially supplement retirement income. And, the policy offers a death benefit that is paid to their selected beneficiaries if they were to die unexpectedly.
“Busting” the myths
As you can see, Millennials need life insurance just like any other generation. And, they may be in an ideal position to qualify for very affordable premiums due to age and health considerations.
If you have clients who are Millennials, make sure they understand the importance of purchasing life insurance NOW – if not for themselves, for those they leave behind.
Lee B. Hunter, FLMI, ACS, is a Life Marketing Consultant, at Ohio National Financial Services. He can be reached at[email protected] or 513.794.5906.
1 Inside the Millennial Mind: The Do’s & Don’ts of Marketing to this Powerful Generation, Forbes, April 16, 2014
2 What Is “Affordable Life Insurance?” National Underwriter Life and Health Magazine, March 1, 2010.
3 Centers for Disease Control and Prevention, National Center for Injury Prevention and Control. Web-based Injury Statistics Query and Reporting System (WISQARS) [online] (2007) [cited 2011 Mar 4]. Available from URL:http://www.cdc.gov/injury/wisqars.