Generally speaking, there’s usually no better time than now to arrange life insurance cover, however, it’s important to understand the range of options and products available to you, whatever stage of life you’re at.
However, millennials and young adults tend to put off buying cover due to other financial concerns, such as car finance, student loan repayments and paying a mortgage. While paying bills is critical, missing out on buying a life insurance policy at a young age can be costly, much like delaying saving for your retirement.
In this guide, we'll look at why millennials need life cover and the options available
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Do millennials need life insurance?
Life insurance isn’t just for certain age groups. It can be useful for anybody if you want to provide financial security to your loved ones in the event of your untimely death. For young people, who are often at a stage in life where financial responsibilities are just beginning, it might seem like something to delay.
Many young people are starting families, buying homes, and taking on other financial responsibilities. If you have dependents — like a partner, children, or even family members who rely on your income — your policy could help them avoid financial hardship if something happens to you.
There is also the burden of student loans, credit card debts, rent or a mortgage. In the event of your death, these debts could be passed on to your family. Owning a policy can help cover these debts so that your loved ones aren’t left to cover the cost themselves.
While it’s easy to put off, securing a policy at a younger age can often mean lower premiums, making it a smart move for your financial future.
Don’t assume that life insurance is too expensive
The cost of life insurance can be determined by several factors, most notably your age and health. It can also be affected by the type of policy you choose and the amount you are covered for.
For millennials, buying cover can be cheaper than if left till you are older. As you age, your health may decline, and premiums typically increase. By purchasing a policy while you're younger and healthier, you could qualify for lower rates and potentially lock in a lower premium for the term of the policy.
If you have a pre-existing health condition, your premiums may cost more, but if you buy early you could still find affordable cover.
Know what you’re buying
Term life insurance
Term life insurance runs for a fixed period of time (known as the ‘term’ of your policy) eg. 10, 15 or 25 years - but only pays out if you were to die during the term of the policy. There’s no lump sum payable at the end of the term.
It has three levels of cover:
Level term life insurance - where the payout amount and premium remain fixed throughout the policy
Decreasing term life insurance - where the policy is used to cover a large dent like a mortgage. The payout decreases over time as repayments are made.
Increasing term life insurance - where the payout increases over time to combat inflation. As this happens, the premiums also increase.
Whole life insurance
With whole life insurance cover, the clue is in the name. Unfortunately, we all die one day, so as this policy is ongoing, it will pay out a lump sum whenever that day comes.
Understandably, these policies are typically more expensive than term insurance policies since as long as you keep paying your premiums, the insurer will always have to pay out, whereas you may outlive a term insurance policy.
Joint life insurance
For young couples, joint life insurance can be a practical option, especially if you share financial responsibilities. The policy is designed to pay out either once one of you dies, or once you have both died.
It's a great way to leave support for your partner if someone were to happen to you and vice-versa. If you share a mortgage, for example, the payout could be used to help the surviving member cover the remaining payments.
Another benefit of joint cover is that there is only one premium to pay, making it easier and potentially cheaper to have than for separate policies.
Critical illness insurance
Although it does not cover death, critical illness cover can be a valuable addition to a life insurance policy. It could be worthwhile for young people who are concerned about health issues that could arise unexpectedly.
This type of insurance provides a financial safety net if you are diagnosed with a serious illness, such as cancer or a heart attack, that prevents you from working.
Income protection insurance
Just like critical illness cover, income protection insurance acts as a financial safeguard for those who heavily depend on their regular income to cover living expenses. This type of insurance covers a portion of your income if you are unable to work due to illness or injury, helping you to maintain your lifestyle during this absence.
Get advice on life insurance
At Cavendish Online, we have a wide range of policies from dozens of providers that specialise in low cost life insurance for all ages, including younger people. Speak to the team today to choose a policy that's right for you.
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Our team of expert protection consultants are here to help. Call for a quick quote and more information now:
01392 241 850(Monday to Friday, 10am to 6.30pm)
