The generation commonly known as millennials, or Generation Y, is coming of age in almost all the countries, potentially creating new challenges and opportunities for the insurance industry globally. Millennials are generally 20 to 35 years old and make up nearly 40 percent of the world’s population. In contrast, their parents (the baby boomers) currently constitute roughly one-third of the population.Unlike their parents, millennials have typically elected a lifestyle that includes postponing many significant life decisions, such as marriage, having children, and purchasing a home.They’re generally characterized as being highly educated compared with other generations, tech savvy, enjoy alternative methods of travel, and are moving to urban areas in record numbers. They also typically face significant challenges in the job market and record levels of debt from student loans.
One of the many reasons why millennials don’t buy life insurance is because they think they are young, healthy and don’t have kids and assume that they will remain ever youthful. But, if anybody is avoiding a life insurance plan because of these reasons, it is high time that they change the way they look at life.
Availing a life insurance plan is no longer anindulgence or a luxury, it is a necessity. The younger the prospects are, lesser are the premiums. This is because they are healthy at this age and will be a low-risk prospect for a life insurer. This makes it easy for them to get life cover at an affordable price.
Who are the Millennials?
Millennials, also known as Generation Y or the Net Generation, are the demographic cohort that directly follows Generation X. The term Millennials is usually considered to apply to individuals who reached adulthood around the turn of the 21st century. The precise delineation varies from one source to another, however. Neil Howe and William Strauss, authors of the 1991 book Generations: The History of America’s Future, 1584 to 2069, are often credited with coining the term. Howe and Strauss define the Millennial cohort as consisting of individuals born between 1982 and 2004.
Other proposed dates for Millennials:
According to Iconoclast, a consumer research firm, the first Millennials were born in 1978.
Newsweek magazine reported that the Millennial generation was born between 1977 and 1994.
In separate articles, the New York Times pegged the Millennials at 1976-1990 and 1978-1998.
A Time magazine article placed the Millennials at 1980-2000.
Overall, the earliest proposed birthdate for Millennials is 1976 and the latest 2004. Given that a familial generation in developed nations lies somewhere between 25 and 30 years, we might reasonably consider those the start and end points.
Following are the reasons life insurance is important to millennials:
It is Cheaper When millennials are Younger:
When it comes to buying insurance, being young does have its privileges. For one thing, the millennials are considered low risk so that they will be able to buy a comprehensive policy at a much cheaper rate, especially if they have no pre-existing illnesses. They should shop around for a policy that provides the coverage they need at a rate they can afford. The longer they procrastinate, the higher will be the premiums will be and might even have trouble securing any insurance in the future if they develop any health issues.
Debt-free legacy for dependents:
What happens if a breadwinner has loans, say a home loan? Which is a long-term commitment involving costly EMIs. What happens on an unexpected demise of the bread winner? These loans have to be paid back. So, it’s best to avail a life insurance plan especially Term Plans or Mortgage Plans and name one’s dependents, spouse, parents or children as beneficiaries. As discussed, the millennials have age as an advantage and can secure a life insurance plan at affordable rates.
It’s no secret that today’s graduates, especiallythe ones studying abroad, pursuing higher education in IIMs, IITs, and medical are burdened with record-breaking levels of student loan debt. If something were to happen, it could fall entirely on the parents to pay off those educational loans. For example, if Mom and Dad took out an education loan that these people are making payments on, the balance lands on their platter if one suddenly pass away.
For another example, let’s say a millennial just got married and racked up a huge credit card debt on a joint account. Or maybe he just bought a home for which the millennial and his spouse co-signed a lease. One has to consider whether the spouse would be able to handle the load alone. Buying enough life insurance can take care of all these financial issues. That way one’s loved ones can have less stress to deal with in the event the millennial pass away.
For one more example to quote, millennials are falling into debt trap of credit cards, where they end up buying costly gadgetsas frequently as possible.
Millennials have children:
Most millennials are waiting longer to get married and have children. But if one had an early start, they have to make sure their little ones will be taken care of in the worst-case scenario. This is particularly important if the spouse is a stay-at-home parent, or a domestic engineer. Since they’d need the money to replace the bread winner’s income stream at least temporarily. Even if both the spouses work, life insurance could still come in handy when it’s time to pay for higher education costs down the road.
Build Up Savings at the Same Time:
They canafford to choose a policy that grows and accumulates wealth and simultaneously provides protection. Insurance companies generally offer two types of such plans: Endowment and Unit-linked Insurance policies (ULIPs). Endowments work particularly well if you want access to their money during a certain period, for example, in 15 years’ time when they want to pay for their child’s education. Endowment plans offer low risk with moderate returns. If one aspires to accumulate wealth, in the form of ULIPs, they can speak to a qualified financial advisor to assess their risk appetite and decide which type is best for them. For people having children an ideal plan would be the one which has waiver off premium option.
The life insurance policies can act as a savings vehicle with relatively low risk. As a millennial, one may likely have many years to accumulate savings and these kind of cash value policies can be a nice supplement to one’s nest egg.
Employer Life Insurance is Insufficient:
While it is great to have group insurance coverage provided by employers, it is likely to be very basic protection. One may need to pay more out of pocket in the event of an emergency, which can be inconvenient, especially if one is trying to save money. The policy is also tied to employers, so if oneleaves the company and are in between jobs, one will not be protected during that period. Having a personal insurance policy tailored to one needs will ensure that they are adequately covered at all times.
Employer’s Insurance May Not Be the Best One:
Even if the millennials are offered life insurance through employer, might be more expensive to add coverage than to buy a separate policy. The rates may actually be higher through the group life insurance offered by employer. It also might not offer the features that one care most about. Plus, most employer-sponsored policy premiums increase sharply after age 35.
Millennial is an entrepreneur.
If millennial started a business and is passionate about and want to ensure its success no matter what happens, insuring it is wise idea! Life insurance can protect the business and keep it flowing without the millennial.
What factors to consider while finding the best pick for the millennials?
Finding the right type of Insurance plan might seem like a tough Nut to Crack. The things one must take into consideration before opting for any policy is that one must assess their financial needs and goals. They can also consider inflation and accordingly check the different Life Insurance plans available.
Millennials can also evaluate various Life Insurance policies that best suits their needs and if possible can consult a trust for the financial advisor to help find the right pick.
Analysing the right plan as per their requirement and budget is a significant step before opting for any plans since it would help them to reap the benefits in the long run.
Conclusion
Although the Life Insurance policy may not seem like a top priority in millennial’s checklist at this time of life, it would be a very crucial part of one’s financial goals at some point. It’s better to take the right call at the very right time. Life Insurance would not only offer protection, but it will also make the best use of one’s money along with financial stability for their loved ones.
