Many millennials are moving up in their careers, earning higher incomes, expanding their lifestyles, and starting families. Life insurance can be an excellent way to protect loved ones in these circumstances. Yet according to LIMRA’s 2022 Insurance Barometer Study, about 35% of millennials say they don’t own life insurance because it’s too expensive.
At the same time, the study found that 80% of millennials overestimate the cost of life insurance. That’s because there are plenty of affordable life insurance policy types that millennials may not know about. With that in mind, this article will dive into three affordable life insurance options for millennials.
Term life insurance
Term life insurance is a policy that lasts for a fixed term, usually 10 to 30 years. You get to choose the term length within that range, and once the term ends, your policy expires. You’ll need to renew the policy or get a new one to continue coverage.
This means you risk outliving the policy, but the premiums are often more affordable than permanent life insurance policies while offering similar coverage amounts. Because of this, many millennials may be able to fit a large amount of coverage into their budgets quite easily. That said, you should still shop around to get the best term life insurance quotes.
Guaranteed issue life insurance
Guaranteed issue life insurance is a small permanent life policy that doesn’t require a medical exam. It has a low death benefit, but premiums are very affordable, and insurers guarantee approval. The lack of a medical exam and guaranteed approval can dramaticallyshorten the process, making these policies a great option for the busy millennial.
Guaranteed issue life insurance also comes with a cash value growth component. Part of each premium goes into this component and grows tax-deferred at a fixed interest rate. As the cash value grows, you can withdraw from it or take out low-interest loans. Also, if you surrender your policy, the insurer will pay you the entire cash value minus surrender charges. This option makes guaranteed issue life insurance a potential alternative source for millennials who have maxed out other savings vehicles.
Keep in mind that many guaranteed issue life insurance policies may have a two to three-year waiting period. Coverage is not active during this period. If you pass away during this period, the insurer may pay back your premiums to your beneficiaries, but not the death benefit. Once the waiting period ends, these policies function like any other small permanent life policy.
Final expense insurance
Like guaranteed issue life insurance, final expense life insurance is a small permanent life policy with a low death benefit and inexpensivecheap premiums. These policies are designed to provide a death benefit to coverwith enough money for end-of-life costs, like medical bills and funeral expenses. Final expense insurance policies also come with cash value growth components, allowing millennials to build savings wealth over their life as they pay premiums.
Single millennials or couples who work and have lower expenses — such as childless couples — may benefit most from this policy. If the policyholder passes away, the other may not need to replace their income, but might need help covering those final expenses.
Get affordable life insurance with the coverage you need
Life insurance can seem complex, so it makes sense that some millennials might think it’s expensive. But luckily, there are plenty of policies for any budget. Term life insurance might work best if you need coverage at an affordable rate. Death benefits are on par with traditional permanent life insurance policies for lower premiums, but keep in mind that these policies do expire.
Busy millennials who want lifelong coverage, low rates, cash value for savings wealth-building potential, and guaranteed approval might consider guaranteed issue life insurance. And final expense insurance is another option for millennials whose loved ones don’t need help replacing their income but may need assistance with the policyholder’s end-of-life costs. Whichever policy you choose, gather quotes from multiple insurers so you can compare and find great rates on the coverage you need.
