While the life insurance market is growing globally, there is one group that is being left behind. Millennials (typically defined as those born between 1980 and 2000) are failing to grasp just how important life insurance is and how much money they can save by purchasing life insurance while they are still young and health.
You see, many “millennials” have substantial debt (mortgages, student loans, vehicles) and plenty of insurable risks such as spouses and children. However, a May 2017 survey of this same group found that more than half of them have no life insurance at all which is leaving their loved ones tremendously exposed.
The survey uncovered a couple of key reasons why these young Canadians haven’t protected their dependents with insurance plans yet.
Over 2/3 of those surveyed didn’t seem to be aware of the types of liabilities that life insurance can cover. The basic concept that this money could and should be used to help pay off debts so that your surviving spouse isn’t left behind with a single income and a debt load that was taken on when two incomes were coming in did not seem to register. Likewise, most millennials didn’t comprehend that a life insurance policy is absolutely imperative when you have children so that they can be provided for if something happens to you prematurely. The common belief was that life insurance was only used to pay for end-of-life expenses such as funerals (and of course nobody thinks that they will die so young so why bother?).
Those surveyed that had considered life insurance but hadn’t set any up yet stated cost as the top barrier to doing so. I have to say that the life insurance industry is largely to blame here since many licensed insurance salespeople try to talk consumers into elaborate and expensive whole life or universal life policies that they really don’t need and likely can’t afford. The truth is that most millennials with the above-mentioned debt and insurable risks don’t need a permanent insurance policy and only need (much cheaper) term insurance.
If we look at the mid-age range of the millennial group (age 27 today) and assume they need $500,000 of term insurance, the cost would only be around $23 per month for a male or $17 per month for a female. I know that these young Canadians have many other financial priorities such as paying down debt, saving for a house or buying a couple of Starbucks coffees every day but I’m pretty sure term insurance can fit into all of their budgets.
I also realize that the target age group I’m referring to here may not be the ones that are reading this column today. So it’s up to you – the parents and grandparents of millennials – to pass this important information on and help them understand why life insurance is so important and easy to obtain.
Brett Millard, CFP®, CIM®