To be a millennial is to face risk – good and bad. The technology that has revolutionized home life – streaming, social media and smartphones, among other things – has rendered many older jobs obsolete. But it has also opened the door to new ways of working and living.
Compared to earlier generations, millennials – those born in the 1980s and 1990s – spend more time in school, live at home longer, and marry later. They are slower to land permanent jobs. Yet, they have the same goals of a good job, a good house and a good relationship. While life’s major events may be delayed for many millennials, they do happen.
And when they do, it makes sense to protect what you’ve achieved. Millennials, just like earlier generations, need to consider insurance as a means to protect what they have and to manage the risk of what may happen.
Here are five reasons why:
- Cheaper rates
Millennials are still young and often have good overall health.
A young and healthy person will pose less of a liability to an insurance company because the risk of death is low. If you purchase a life insurance policy before any medical conditions develop, you’ll most likely save some money in premiums. In general, the younger you start, the cheaper your insurance.
- Obligations with partners
Death can become a heavy financial burden if you have a partner with whom you have a joint account, or with whom you’ve co-signed a loan. Here, life insurance can be make up for the sudden loss of income — and pay for a funeral.
- Limited employer insurance coverage
While many companies have a benefits package that includes accidental death and dismemberment insurance, coverage may not be adequate for your needs. The company insurance policy may include many features that you don’t care about. Moreover, job changes may leave you without coverage.
- New business venture
Many millennials opt for an entrepreneurial career. Working in a start-up or company where you are an owner can be empowering, but it also carries risks. An untimely death may leave your business in a difficult spot while new owners or investors are sought. A life policy can be structured to provide “key-person” insurance to keep the business going.
Insurance can also secure peace of mind when it comes to home ownership. A life policy can be used to pay off mortgage debt – and is generally a better and cheaper deal than bank-provided mortgage insurance, which only covers mortgage debt. Depending on what you buy, a life insurance policy can cover the mortgage but also provide a cushion for your partner.
While many of life’s major events may seem delayed for millennials, insurance isn’t something you should put off. For one thing, the unexpected doesn’t make appointments.
The bridge to asset-building
A final consideration: life insurance need not be treated solely as a short-term risk-management tool. As you build assets, you may find that your needs and desires change. You may want to turn your insurance into a growth asset.
The way to do this is to buy a term policy that allows you to convert to permanent insurance, generally a whole life policy. Instead of having to be renewed every five years, a permanent policy lasts as long as you do. With a conversion option, you won’t need to submit to medical tests to get coverage.
A whole life policy usually incorporates a savings component – so that the policy serves two purposes: covering your risks and building assets. Typically, you can borrow against the value of your policy should the need arise. What’s also appealing with a whole life policy is that you can add riders to cover specific needs – such as disability or critical illness.
For younger Canadians, life can seem more uncertain than it did for past generations. Insurance is one way to manage that uncertainty.
This article provides general information and may not be applicable to you. Foresters Financial and its representatives does not provide legal, tax or estate advice. Please consult an agent or advisor to learn more about how life insurance can meet your specific needs.
416357 CAN/US/UK (05/18)