Why do millennials need life insurance? Below are 22 reasons millennials should buy life insurance. This isn’t a sales pitch. More than likely you will experience one or more of these life events (if you haven’t already). Life events tend to have a big impact on a person one way or another. I encourage you to give these some honest, careful thought.
1 Spouse/Significant Other
Do you have a team member at home? That person who knows you through and through? You don’t buy life insurance for yourself. You buy it for the people you come home to every night.
They are your world. You want the best for them. It’s hard enough on an adult if their spouse is no longer in the picture. Think about how you would want your kids taken care of.
- Would your spouse be able to maintain your current lifestyle, live in the same home? Or would your family have to move due to lack of a second income?
- If you’re a single parent, who would take care of your children? How would your kids impact the financial situation of their new guardians?
- Will your kids further their education after high school? Would you like to set aside some money specifically for higher education?
3 More Kids
More kids can increase expenses. Take time to review your life insurance every couple of years. Be sure you have adequate coverage. I’m not saying you need to be insurance poor. Take the time to prepare.
4 You Own a Business
A. If you’re the sole owner and you die, life insurance will allow your family to use the money to pay for expenses out of the ordinary that relate to the business. It will give your family a little time to determine if they want to sell the business, hire someone to run it, or take on the management themself.
B. In the case you have a business partner, you can purchase life insurance naming your business as the beneficiary. This allows your partner to use the life insurance proceeds to buy your interest in the business from your family.
5 Your Business Has a Key Employee
You have one employee at your business who is your right hand man/woman. He/she is there when you need them. Your business would feel the impact if this key person passes away. This may not directly affect your family at home. Yet, you will have more on your plate at work until you can find and train someone to take his/her role. Time is your most valuable asset. Ultimately this could lead you to spending more time at work (versus with your family). Not to mention the toll it may have on your business.
Buying life insurance on your Key Employee and name your business as beneficiary is a solution.
6 You Own a Home
If you don’t owe anything on your home, give yourself a huge pat on the back!
Most millennial homeowners have a mortgage. Could you afford your mortgage on your income alone (don’t count your significant others income)?
7 Leave a Gift
Do you have a favorite charity or non-profit you would like to leave money to when you pass?
8 Create an Equal Inheritance
You own a business (or farm) and plan to pass it along to one of your kids who has worked alongside you for several years. He/she wants to take over the business some day. The challenge is you have multiple kids. The other kids don’t want the business. You want to make their inheritance equal. What do you do?
You could purchase life insurance on yourself with the other children as the beneficiaries. Determine the value of the business and buy a life policy of equal value for the children who do not have anything to do with the business.
9 Replace Income
Take a minute to think about monthly expenses…electricity, water, sewer, rent, student loan, etc. Imagine going from a two income family to a one income family. Realistically, could you afford it?
Life insurance allows you too replace income. How long would you need your significant others income? One year? Five years?
10 Peace of Mind
No one wants to think about their mortality. And buying ice cream is so much more enjoyable. My sister-in-law refers to this as adulting.
I’ve said it once and I’ll say it again, the objective is not for you to have another expense. Life insurance should give you some peace of mind.
I hope you never use it, but know you have prepared the best for your family should the unexpected happen.
11 Student Loans
It’s been a lingering expense for several years. You can afford it right now. It’s manageable. But don’t leave your family with it.
12 Final Expenses
The average cost of a funeral can easily run between $8,755 and $11,000. That’s conservative.
Keep in mind Final Expenses may be more than just a funeral.
- Medical bills
- Court costs (possibly costs associated with probate)
- Estate taxes
In the event of a divorce, specifically when kids are involved, the court can require the spouse responsible for alimony or child support to carry life insurance and name their ex-spouse as beneficiary. The length of the policy and amount of insurance will be decided by the court.
14 Elder Care
Are you responsible for caring for a parent or grandparent? If you pass away, who will take care of them? What costs are associated with caring for them?
15 Credit Card Debt
Do you really want to leave your family with credit card debt to worry about?
16 Get it While You’re Young
You don’t want to hear it, but you’re not getting any younger. Life insurance will never be as affordable as it is today. Nor is it as expensive as you might think.
17 Estate Taxes
As of 2019, the estate and gift tax exemption is $11.4 million. This means if you pass away and have an estate worth more than $11.4 million, you will owe a significant tax. This is where Estate Planning comes into play. Life insurance could be a solution. This may not affect many millennials…that’s not to say you won’t find yourself in position to be planning for this in the future.
Side note…Estate Planning is not for the ultra wealthy. Click here for Estate Planning basics.
18 Care for Special Needs Children
We discussed kids in number two and three above. If your a parent of a special needs child, do you have a plan in place if you die unexpectedly? Who will care for your child? What will it cost?
19 Workplace Life Insurance is Sparse
If your employer offers life insurance – awesome! Especially if they give it to you at no cost, take it.
Now is that amount enough? Doubtful…with that being said, I don’t know your situation, but the coverage limits on most life insurance policies offered through an employer are not adequate.
20 Stay-at-Home Spouse
Just because you don’t have a formal job where you get up, get dressed, jump in your car and go to each day doesn’t mean you don’t need life insurance. Take a minute to do an inventory of the things you do day in and day out. Now put a price on those tasks. If your significant other had to hire someone to cook, clean, drive the kids to school and practices…what do you think that would cost? Would it change his/her lifestyle without you?
21 Unexpected Illness
Unless you have a crystal ball it’s doubtful you know what the future will hold. I knew a gentleman in his 20’s who developed skin cancer. He went several years where he was ineligible for life insurance. Then when he did become eligible in his 30’s it was extremely expensive.
The point is, buying life insurance while your in good health means securing your premiums for the length of your policy. Should you get an illness during the policy period it will not impact your policy or premium.
Legacy may sound cliche, however, here’s something to consider…
Merriam-Webster defines Legacy as:
- a gift by will especially of money or other personal property
- something transmitted by or received from an ancestor or predecessor or from the past
The purpose of insurance is to make you whole. That goes for any type of insurance. Whether it is your auto, home, or business insurance. It’s no different with life insurance. That’s why it’s so important if you have someone that depends on you financially.
The objective is not to make your family rich. It is to make them financially whole again in the midst of challenging chapter of their lives.
Your legacy may reach far deeper and wider than anything discussed in this blog post. But you have a responsibilty to your loved ones.
Still not sure? Have more questions? Let’s talk.