If you’re a millennial you may think it’s not necessary to purchase life insurance, but depending on your family circumstances, it could be one of the best financial decisions you’ll ever make. If you have people in your life who depend on your income, a life insurance policy will help ease the burden in the event of your early death. Now is the time to get your affairs in order and put protections in place for loved ones who look to you for support.
The Cheat Sheet spoke with Yaron Ben-Zvi, co-founder and CEO of online life insurance provider Haven Life for more on why younger consumers need financial protection.
The Cheat Sheet: Is life insurance still necessary for a millennial who may not have any children or a spouse?
Yaron Ben-Zvi: Yes, life insurance could still be necessary for millennials without a spouse or children. It’s well known that many millennials are leaving college with significant student debt. If the debt has been co-signed by a parent, the responsibility for repaying the loan will be left to the parent if he or she were to die. The same can be said for co-signed mortgages or car loans. If you have all three, that leaves a heavy financial burden, and life insurance may provide a needed safety net. Though death and debt aren’t typically dinner table conversations, it’s important to understand your financial obligations and how they could impact your family.
CS: How can one determine his or her coverage needs?
YB: There are numerous life insurance calculators available online that can help you determine your needs. Haven Life offers an accurate and easy-to-use coverage calculator that takes into consideration factors like age, health, marital status, income, and debt to help ensure you purchase a policy that fits your financial situation. In addition, we provide you with rates for our Haven term policy, along with those of other top-rated insurers.
CS: How much would life insurance typically cost a millennial?
YB: Coverage needs vary from person to person. However, the younger and healthier you are, the less expensive your policy will be. For example, if you’re a single, healthy 30-year-old woman who is looking to purchase a policy to cover your co-signed debt, a Haven term policy will cost about $15 per month for a 20-year term length and $250,000 of coverage.
The Cheat Sheet: What are some things millennials should pay attention to when shopping for life insurance?
Yaron Ben-Zvi: The biggest mistake millennials make when it comes to shopping for life insurance is putting it off when they need coverage. While the decision to purchase a policy can be intimidating, there are many resources available online to help you figure out what kind of coverage you need. At Haven Life, we offer a coverage calculator and a term life insurance guide that aim to help you make an informed decision. When searching for a provider, it’s important to compare pricing and coverage, choose a highly rated insurer, and select a purchasing process you are most comfortable with. We offer an entirely online process, with customer service available, for those seeking a self-directed option. You can also go through an agent or financial planner if you’d like someone to take you through the process. What’s most important is that you purchase coverage once you need it.
CS: What types of life insurance are available? Is one necessarily better than the other?
YB: There are numerous types of life insurance policies available. However, to keep it simple, there are two main types: term and permanent. Term life insurance is the simplest and most affordable type of life insurance and is characterized by its set term length for coverage. Permanent life insurance has an investment component and typically costs much more than a term life insurance policy — think $30 versus $500 a month for a healthy 35-year-old. Because of its complexity and cost, it’s best to consult a financial professional when considering it.
CS: What other types of insurance should millennials get?
YB: Outside the obvious types of insurance, like health and auto, I’d say disability insurance is one of the most important. It protects your ability to work and continue earning an income. We can’t predict what will happen to us over the course of our lifetimes, and we shouldn’t assume we’ll always be able bodied.