Life Insurance: Why Millennials and Gen Z Are Securing Protection NowSeptember is Life Insurance Awareness Month, and a good time for adults of all ages to consider life insurance. You may be surprised to learn that life insurance isn’t just for those over age 40 or married with children. In fact, many younger individuals recognize the advantages of securing life insurance as early as possible.
Life Insurance Perceptions: Surprising Data
In LIMRA’s 2024 Insurance Barometer, 42% of respondents said they need life insurance or need more than they currently have. Interestingly, 46% of Millennials and 49% of Gen Zers said they need coverage.
Interest in life insurance tends to coincide with general financial concerns, and the survey found that among all generations, Millennials had the highest levels of financial concern. Additionally, Gen Z’s concern about finances has increased by 8% in just two years. This could be the result of rising costs, but it could also be because the oldest Gen Zers are approaching 30 and starting to take on more family responsibilities.
Overcoming Barriers to Coverage
Nearly half of the adult U.S. population recognizes the need for more life insurance coverage. What’s stopping these people from buying the protection they need? LIMRA found that cost was the primary reason – a reason that is possibly unfounded considering that 72% of respondents overestimated the cost of a basic term life insurance policy.
In other words, people think they can’t afford life insurance, even though they probably can.
While the cost of a term life insurance policy varies based on a number of factors, including age, health, the benefit amount, and the length of the policy term, coverage is surprisingly affordable for most people. For instance, according to MoneyGeek a 30-year-old woman might pay $15.00 a month for a $250,000 policy with a 10-year term.
The Advantages of Buying Coverage Young
Because life insurance rates increase based on age and health risks, it’s smart to buy coverage as early as possible, and to lock in a 30-year term if it makes sense for you. For instance, if you purchase coverage when you’re 30 years old, you will be covered through age 60, at the low rate you locked in three decades prior.
There are also other reasons to buy coverage when you’re young.
Although a young, healthy person’s odds of death are low, they are not zero. Nobody knows what the future will hold, and unexpected events like car crashes and cancer diagnoses are always possible. It’s smart to be prepared. An unexpected death often creates a financial burden for surviving family members. However, an inexpensive life insurance policy can make life easier for your loved ones by covering final expenses, paying off your remaining debts, and providing for those who rely on your income. Life insurance can also be used to leave a gift for a beloved charity if you choose.
Finding Coverage That Meets Your Needs
There are multiple types of life insurance policies, some of which are more expensive than others. Here are two general categories:
| Policy Type | Duration | Benefit | Cost | Riders |
| Permanent /Whole Life | Stays in force until you die – if you pay the premium. | Pays a lump sum death benefit to named beneficiaries.
Also, builds cash value that you can use like a savings account, as you wish. |
Because permanent policies build cash value, they cost more. | Many policies offer optional riders to enhance your coverage with “living” benefits. One popular example is the chronic illness rider, which allows you to collect part of the death benefit if you are diagnosed with a chronic illness. |
| Term | Stays in force for the duration of the selected policy term – often 10, 20 or 30 years – if you pay the premium. | Pays a lump sum death benefit to named beneficiaries.
Does NOT build any cash value.
|
Term policies are the most affordable type of life insurance. | Term policies tend to be basic, with few optional riders. |
As the chart illustrates, a permanent life insurance policy that builds a cash value will cost significantly more than a term policy. You’ll also have to pay more if you want a larger benefit – a $1 million term policy will cost more than a $250,000 term policy.
If you need affordable coverage that will ensure your family is taken care of, a term life insurance policy with a modest death benefit is a great option. More comprehensive coverage or additional benefits are also available. You can also layer multiple types of policies to maximize your protection levels.
Don’t let the options overwhelm you. An insurance broker can help you assess your life insurance needs and explore your options to find a policy that works for you.
Do you need life insurance? Heffernan Insurance Brokers offers a complimentary review and assessment. Learn more.
