Do Millennials need life insurance?

That depends, but if 2020 taught us anything, it’s that some things are just plain out of our control. But today, there are more tools and products than ever before — like online term life insurance — that could help you take back some of that control by bringing smart financial planning within reach. As more Millennials are buying homes, getting married and having children, it’s essential to start thinking about life insurance.

Here are five reasons Millennials should consider life insurance now.

1. Locking in a Low Rate Now While They’re Healthy
If you know you need life insurance, then the best time to buy a policy is now. The younger and healthier you are, the most affordable coverage will be. For example, a healthy 35-year-old woman can purchase a 20-year, $500,000 policy for as little as $20 per month. Unfortunately, none of us knows what our health will be like six months, one year, or two-plus years from now. So it’s best to purchase coverage once you have financial dependents and lock in that pricing for your policy’s duration.

2. For Millennials, Buying Life Insurance Can Be Easy
The main barrier to purchasing life insurance has historically been the cumbersome and lengthy process to get it. Shopping around, speaking to sales reps, filling out a lengthy application, undergoing a medical exam — the list goes on. It took several weeks to find out your final price and get your coverage finalized.

Like other areas of your financial life, technology has made purchasing life insurance easier than ever, especially for Millennials. Younger, healthier individuals generally have less complicated medical histories, which means they can lock in some of the best prices and enjoy the conveniences of modern technology.

With some new digital platforms, Millennials who need life insurance can apply online in as little as five minutes, and a medical exam isn’t required. So if you are putting off buying a policy out of fear it will be a hassle — don’t. Just take 5 minutes before your next Netflix binge-watching session to apply.

3. Millennials Are Establishing Their Families
Millennials who have a partner and/or children should consider life insurance. Most couples rely on their partner for some level of financial stability, including splitting large budget items like rent or the mortgage and all the expenses of raising a family together. With life insurance in place, your loved ones have a financial safety net in case the worst were to happen — and who doesn’t want to leave their family better off financially?

Consider: If your partner is fortunate enough to stash away some of a policy payout into a savings or investment account, it could make a big difference in the long-term financial health of your household.

Pro Tip: Both partners should have life insurance (and name each other as beneficiaries) to help protect each other financially.

4. Millennials Are Buying Homes
Married or not, don’t forget to cover one of the most significant purchases you’ll make in your life. (And single women actually buy houses at 2x the rate of single men.) If you own a home or if you’re saving to buy one soon, what do you want your loved ones to do with the house if you pass away?

Having a life insurance policy that’s at least equal to your mortgage balance helps prevent your beneficiaries from needing to make a hasty decision due to financial concerns. They could rent the house out, pay it off, move into it, or sell it when ready. There is nothing more empowering than buying a home and knowing you have a plan in place for it no matter what happens.

5. Look Beyond Employer-provided Coverage
Employer-provided life insurance is a great work perk. The problem is that it’s usually job-dependent, so you lose the coverage when you leave your job or may need to pay extra to make it portable. It’s generally better to have individual life insurance outside of work, so you always have coverage in place — whether or not you switch jobs.

How Much Coverage Do Millennials Need?
The right amount of life insurance will depend on your financial situation. A common rule of thumb is to have a policy that’s five to ten times your annual salary.

At Bestow, we see life insurance policyholders in their 30s buying an average coverage amount of $500,000. Choose a policy amount and term length that will cover your financial obligations. For example, if you own a home, choose a coverage amount that covers the remaining mortgage balance and a term length that will provide financial protection until the house is paid off, which is usually 30 years. If you have children, aim for the higher end of that range.

About the Author

Megan Cherry is a licensed agent and director of customer experience at digital life insurance company Bestow.

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