Perhaps, you are just settling in your own apartment or you are looking forward to tying the knot. At this stage, life insurance could be one of the last things that you could think about (and you are not alone).
You probably do not have enough time trying to plan years or even decades from now. But if you have people depending on you for financial support, you have to ensure that you can provide it while securing their future.
If something unexpected happens to you, how will your family get by? Who will take on the debts you left behind?
That said, we have listed down eight things that millennials need to know about life insurance:
Now is the best time to get insurance
Here’s the thing: The two most vital factors of purchasing life insurance is your health and age.
The more you age, the more your health deteriorates. This means that you are becoming less and less insurable. Not to mention that the costs of acquiring life insurance will be more expensive.
So, the key here is taking the first step now. You can start by comparing life insurance quotes that you can afford and can provide you the most benefits.
It protects those who depend on you
Taking care of your family and loved ones are probably the most important thing that you can do. But if you unexpectedly pass away, so will your income.
While you are more than an income to your family, those funds are important to those who depend on you.
Having the right policy in place will allow your loved ones to take care of the final expenses of your passing, and save them from financial troubles when you’re gone.
It can help ensure business continuity
Do you currently own a business? If so, then you probably worked hard to make it what it is now. But should anything happen to you, this could put your business at risk.
A life insurance policy will help you and your business partners secure your business in an event of a crisis. Doing so ensures business continuity, which will allow your business to thrive even when you’re gone.
It helps cover unexpected expenses
A funeral alone could cost several thousands of dollars. Apart from paying off any expenses and outstanding loans, your loved ones can be financially stretched after your passing.
Life insurance helps cover these costs to help your family cope in difficult times.
Employee insurance may not be enough
If you happen to land a job with an excellent employee benefits package, then you probably acquired life insurance via your employer’s plan.
For millennials that don’t have a family to take care of, that may work. But purchasing a separate policy can be a smart move as well.
If ever you acquire a series of illnesses preventing you to work, this will cover your employer’s policy lapses. Depending on what kind of policy you have, you could use it to cover medical costs if ever you have problems with your health insurance.
Another insurance policy will also cover for you in case you get laid off from work or in case you switch jobs because the company that you worked for goes out of business.
There are a plethora of policies to choose from
Life insurance could be temporary or permanent. A temporary policy, also known as term life insurance, will cover you on a specific timescale. Usually for about 10-30 years.
If you paid for premiums during the policy period, and you unexpectedly pass away, your beneficiaries will receive the death benefit. Otherwise, the policy will expire.
On the other hand, permanent insurance policies mean you’re insured for life so long as you pay your premium. It has a fixed premium and a stated death benefit, and it also accumulates cash value that you can withdraw or borrow at a later time.
The application process can take some time
You can’t automatically avail of a life insurance policy. There’s still an application process that you need to go through.
If you apply online, you have to go through a phone interview or undergo a medical exam. The process could take about three to four weeks.
You can cancel a policy anytime
You can cancel the insurance policy anytime but note that it isn’t an easy thing to do. This can re-up your contestability period or the time that insurance policy needs to look into and deny a claim. Some insurance policies may also require you to pay for a cancellation fee.
The Bottomline
Saving money and preparing for the future in your 20s requires a lot of trial and error. But learning the basics could give you a significant advantage.
Although life insurance might be the last thing in your mind right now, it is something worth considering as part of a bigger financial plan.