Do you think you are too young to need a life insurance policy? Too old? Are you single and/or without dependents? Life Insurance is important for all age groups, though for different reasons. Let’s break it down by generation:
Millennials: Only 52% of Millennials have life insurance, according to the Life Happens and LIMRA 2017 Insurance Barometer Study. The study also found that Millennials tend to overestimate the cost of life insurance. Four in ten Millennials believe that a term-life insurance policy can cost over $1,000 a year. This is over five times what a policy actually costs.
Putting aside this generation’s collective misconception about life insurance, it is a good idea for Millennials to start thinking about getting a policy now for a multitude of reasons. The first of these reasons is that policies are less expensive when you are young and healthy. Many Millennials carry student loan debt. If you had a cosigner on a loan, life insurance can protect them from having to pay back your debt should you pass away.
Parents of Millennials have the means to set their child up for life. Parents are able to have life insurance riders written into their own life insurance policies to cover their children or future children. Once the child is of age, as specified in the policy, the rider can be converted into their own individual life insurance policy.
Gen X: The “Gen Xers” currently range from age 41 to 52 and are generally considered midway into their careers. Most often, family is an important focal point. According to a 2013 study of this generation conducted by MetLife, about 74% of Gen Xers are married and have an average of 2.5 children. In addition, approximately 82% were reported as homeowners. This generation has multiple reasons to own life insurance. About two in ten provide regular care for their elderly parents or relatives who are in need of care.
Life insurance is an important part of a Gen Xer’s overall financial wellness. It is important to bear in mind that life insurance is not only meant to pay off final expenses and debts, such as any loans or a mortgage on a house, but also to replace your household income contribution in the event of your untimely death. Having enough life insurance coverage to keep your household functioning as it had while you were alive is important and an amount worth evaluating regularly. If you are the primary caretaker for an elderly parent or have other dependents, coverage can help ensure they can afford the care they need. Additionally, Gen X parents can take out life insurance riders, which are written into their own life insurance policies, to cover their children or future children. Once the child is of age the rider can be converted into their own individual life insurance policy.
Baby Boomers: The end of World War II sparked the largest “baby boom” in history. 3.4 million babies were born in 1946 alone, starting a new generation aptly called the Baby Boomers. By the end of the birth rate boom, this generation had amassed to 76.4 million people, making up approximately 40% of the U.S. population. Now caught between the ages of 53 and 71, Baby Boomers typically have reached or are planning for retirement. Just as for Gen Xers, life insurance is still an important part of this generation’s financial well-being. Not only does coverage offer a way for your loved ones to pay off final expenses and debts, such as credit cards or a mortgage, or paying for college tuition for their children, but it also serves to protect your income for your household. Life insurance can replace your household income contribution to help preserve your family’s standard of living and to care for them financially when you are no longer able to. This includes care for an elderly parent or other dependents of whom you are the primary caretaker.
Additionally, as with both Millennial and Gen X parents, Baby Boomer parents of minor children are able to have life insurance riders written into their life insurance policies to cover their children or any future children. Once the child is of age, as specified in the policy, the rider can be converted into their own individual life insurance policy.
When it comes to getting life insurance, Baby Boomers may face health issues as they get older. Health and age are both important factors when applying for coverage. However, it may still be possible to obtain coverage depending on individual circumstances. Each specific case should be discussed with a benefits advisor.
To learn more about life insurance or to discuss your specific coverage needs with one of our knowledgeable advisors, contact the New York State Bar Association Insurance Program at (855) 874-0813 or visit our website here.