What Millennial Professionals Need To Know About Life Insurance
Adam Erlebacher is Co-Founder & CEO of Fabric, a life insurance innovator that helps families protect their long-term financial well-being.
As we continue making adjustments because of Covid-19, a lot of people are taking inventory of their lives. Work, school and family dynamics have changed, and many millennials (who are beginning to turn 40 in 2021) are at center stage in life, where they are reassessing their priorities and defining what is important to them.
While life insurance applications increased significantly in 2021 so far, I’ve also seen a lot of millennials put off this financial task. As a parent myself, I am acutely aware of how difficult it can be to focus on life insurance when you’re trying to get your toddler dressed for school, so I’ve put together a few practical points. Here are some reasons millennial professionals should start thinking about securing the future for their loved ones, businesses and even their elderly parents, along with some best practices.
Family: The most common reason people get life insurance is to take care of their families. This means more than just getting a policy that pays out enough to make everyone comfortable. Consider who your beneficiaries will be, perhaps a spouse, children, charity, etc. And make sure someone knows where they can find your policy information and details if and when they need them.
Business: Data suggests nearly one third of millennials have started a business. With any business, there are the obvious physical assets that need to be considered — property, vehicles, equipment, software and more. But with many SMBs, the most important asset is you. Life insurance is a way to help your business survive the sudden loss of your leadership — and the revenue you generate. If you have a co-founder or business partner, they can use the cash from your life insurance policy to keep the business viable until they can make necessary changes to get the company back on track. Your family and others may also be dependent on your company’s continued operations, and without life insurance, the short-term financial strain can be difficult.
Student Debt: If you have a cosigner on your student debt, those cosigners, usually parents or guardians, can be responsible for your debt if you pass away. One way to help make sure that parents or other cosigners aren’t stuck paying off your debt is with a life insurance policy that will cover the payoff amount on your loans.
Health: Millennials are often more proactive and health-conscious than previous generations. Taking care of yourself may also afford you more options for life insurance.
Find the right buying experience.
As digital natives, millennials are used to one-click buying and instant everything. But not all life insurance providers offer digital buying experiences. They may require meetings with agents and physical exams that require blood work. I’ve found that today’s most reputable providers — both online and traditional insurers — will have ample information about the options they offer online or in person. It’s important to do your research.
Questions For Millennial Professionals To Consider Before Applying For Life Insurance
Life insurance companies will want to know a lot about you. So make sure you know a lot about them as well. Here are a few questions you should ask them.
Can I apply online?
Life insurance is one of the last industries to move online, so check first to see whether you can apply online and receive an instant decision. Many traditional insurers still require a meeting with an agent, a paper application process and a health exam. This traditional process often takes 10 weeks to complete. Look for an insurance provider with a process that suits your needs.
How much coverage should I get?
Financial planners often recommend getting at least five times your salary in coverage. For example, the average millennial salary is right around $50,000 per year, so $250,000 in coverage would be a great starting point in this case. Of course, everyone’s situation is different, and your family responsibilities, where you live, how many children you have, etc., can all impact your personal coverage choices. Keep in mind that when buying life insurance through your employer or an organization, you may not be able to take that coverage with you if you change jobs. Your options for coverage may also be limited or have a capped amount, so it may be in your best interest to do the research and look for your own policy to either replace or supplement the policy you receive from work.
Do they require a health exam?
Not all insurance policies require an intrusive health exam. If you are younger (as most millennials are) and in relatively decent health, you may be able to obtain excellent coverage without the hassle.
Do they understand and cater to my specific needs?
It is important to find a company that understands your specific needs because a cheap policy isn’t always the best policy. In the past, life insurance companies would cater to people based on their type of occupation. Today, many insurance providers will focus on your lifestyle and health and tailor their services and policies to specific groups such as new parents, individuals living with diabetes and more.
Is the company well-backed/financially stable?
Life insurance is about having long-term protection, and you want to buy from a highly-rated insurance company. You can learn more about the insurer’s financial strength rating through sites like AM Best or Demotech.
How is their customer service?
I also suggest to check online review sites like the Better Business Bureau and Trustpilot to see how the company’s customer service stacks up. Find out if they offer support only by phone during office hours, or do they offer online, email or chat help 24/7?
Millennials have always been the generation that demonstrates a sense of responsibility for themselves and others. As they become the largest segment of the population and continue to grow their families and business assets, I suggest they take some time to check life insurance off their list.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?