Life insurance is not exactly a load of fun to shop for. Facing our mortality is never fun. The best-case scenario is to provide a safeguard for your loved ones, protecting them against possible financial disaster……. and then hope they never have to claim the payout. That’s a fun value proposition, right?
According to a recent study by the New York Life’s 2018 Life Insurance Gap Survey, millennials are exposed to excessive financial risk because, as a whole, they don’t carry enough life insurance. Millennials, on average, have roughly $100,000 in life insurance coverage and have calculated they’d need about $452,000 to get by if the household breadwinner passed on. That’s a coverage shortfall of $352,000 and 60% more than the coverage gap for the general U.S. population.
What Is Term Life Insurance?
By the most basic definition, life insurance provides a tax-free, lump-sum payment to living beneficiaries if the insured dies while the policy is actively in force. The beneficiaries can use the money any way they want but, life insurance payouts are intended to cover the insured’s funeral expenses, pay off mortgages and household debt, and replace the insured’s income temporarily. Ideally, the death benefit payout helps the remaining family members keep their homes and maintain their lifestyle even after the loss of an equal partner or primary breadwinner.
Term Life Insurance Rates Are Mainly Driven by Age
The younger you are when you purchase life insurance, the more insurable you are, and the cheaper your insurance premium payments will be. Combine with the fact that many life insurance companies now offer “locked-in” level-premium rates for the entire life of the policy, and it’s easy to see the value in buying at a lower price now versus buying later and paying higher premiums for the same coverage.
Getting married, buying a home, or having your first child are typical life events that prompt people to start their long term financial planning and finally get term coverage to protect their loved ones. It is a good financial strategy to purchase at least enough coverage to replace the lost income of the deceased partner. In the event of a sudden loss, life insurance can be essential for the surviving spouse to carry on with affording your current obligations, including mortgages, expenses of raising children, or simply to provide for them in their retirement. Talk to an experienced insurance agent to help you determine how much life insurance coverage you need to adequately protect your family. If you already have life insurance coverage through work, keep in mind that that policy might pay only one or two years’ salary, and will likely end when if leave that job.
So How Much Are We Talking?
One of the main excuses many people tend to use for not buying life insurance sooner is the cost. Coverage is often very affordable for most people. You can find term life coverage for less than $1 a day. Again, age is a major factor in life insurance pricing, so the younger and healthier you are, the lower you can lock in your premiums.
Term life insurance is relatively cheap for the financial peace of mind that you stand to gain. Premiums are actually extremely affordable for most people.
You pay a fixed amount each year, typically for 20 or 30-years, in exchange for the guaranteed benefit of a tax-free payout to your beneficiaries if something were to happen to you while your policy is active.
For a healthy 35-year-old male, it would cost roughly $250 a year for a 20-year level term policy with a $500,000 death benefit. You can check your own insurance need calculations and premiums at Schuler Insurance Services.
For a 20-year term policy with a face value of $500,000, a healthy 20-year-old male would only pay about $30 to $35 per month, and a 35-year-old healthy female would only pay about $40 per month for the same policy.
In consideration of how beneficial a $500,000 death benefit would be for your loved ones if needed, these affordable monthly premiums are very reasonable for millennials to work into just about any budget.
Buying when you are younger lets you lock in a cheaper premium. Buying a longer-term policy can provide you coverage up to and through your retirement. Life insurance premiums can vary significantly for the same product from different insurers, so shop around.
Term Life Insurance Conclusion
While life insurance may not seem like the top priority at this time in your life, getting started with a term life insurance policy is easy and affordable.
Insurance will become an essential aspect of your financial planning, and at some point, you’ll have loved ones you will want to protect, and you will be glad you got a head start and purchased a term life policy to protect the people you care about the most.
Choosing the right life insurance doesn’t have to be confusing. Discuss your needs and concerns with the experienced life insurance agents at Schuler Insurance Services. You can benefit from the expert knowledge of their professional insurance agents who deal with life insurance daily. They can direct customers just starting their life insurance search and help them avoid the pitfalls that can come back to haunt policyholders and their beneficiaries later on.