Millennials Get the Best Life Insurance Rates & Don't Even Know It!

Guest post

Today, we have a guest post from Danielle YB Vason of SheMakesCents. This opportunity came up courtesy of HealthIQ, a company that is focused on getting lower health insurance rates for health-conscious folks.

This post focuses on life insurance. Is it right for you? Well, frankly, it depends on your situation. If you have family members that depend on your income (in part or entirely), and/or if you have co-signers on student loans, then life insurance may be a good option for you to financially protect your family against disaster. Life insurance will only get more expensive as you get older!

However, if you do not have a family or student loan debt, then who would be the beneficiary of your life insurance policy? And why? So, as with all insurance products, your personal situation dictates whether it's a smart move or a rip-off.

Danielle's own post, with more detail on the topic, is available here.

Millennials Get the Best Rates on Life Insurance & Don’t Even Know It

                                                              —Danielle YB Vason, SheMakesCents

When you hear the term “life insurance,” what comes to mind?  Is it your parents’ and grandparents’ generation?  Is it a sad thought like death or the process of planning a funeral?  Or, is it something that you have on your to-do list to understand when you are “older” because you are not in that headspace right now?  

For many millennials, life insurance is not high on their priority list, which is evident from the 2015 study from Life Happens and LIMRA that found that “60% of millennials prioritize mobile phones, internet, and cable over life insurance.”  Cell phones, internet, and cable are all elements of one’s day-to-day life whereas the need for life insurance is so far out, right?  

Wrong.  

Life insurance in its simplest form is a contract with an insurance company. The investment company, Fidelity, explains: “In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death.”  

I believe that millennials are not jumping on the life insurance bandwagon because the idea of death seems so far away.  More than that, millennials do not understand what life insurance is, what it does, and how they, as a generation, are in the best position to get the most affordable rates.  

Why Do Millennials Get the Best Rates on Life Insurance

Of the living generations, millennials are in the best position to take advantage of the best rates on life insurance. (*Ed note: this is true if you're specifically talking about adults. Life insurance would be even cheaper for children. Assuming you're healthy, the younger you are when someone purchases a policy that names you as the covered individual, the lower the life insurance premiums will be. I note this because sometimes, grandparents purchase life insurance for their infant grandchildren. That's usually a waste of money—after all, in the event that the child dies, who will need the payout?—but it's also one of the cheapest types of insurance available).  That is because insurance companies view millennials as low risk because of their youth and presumably good health.  Those “low-risk” statuses are one of the main reasons that millennials save more money and are able to lock in a lower more affordable rate as compared to older generations.  

To take the savings potential even further, millennial women, in particular, generally receive the lowest quoted rate.  That is because women live longer and are perceived to be less likely to partake in risky hobbies such as skateboarding, skiing, and trekking – all hobbies that insurance companies consider dangerous, cause premium increases and are often attributed toward experiences men enjoy more by insurance companies.  When you think about it in those terms, it should not be so surprising that millennials get the best rates on life insurance.

The benefits afforded to the “avocado toast” generation and their ability to lock in an affordable rate is evident to Generation X (1965-1981) and the Baby Boomers (1946-1964) and not millennials, according to data collected from this Health IQ quiz.

When asked “Which of the following generations is most likely to get the best rate for life insurance?” the results were eye-opening.

Of the generations represented, 80% of Generation X and 62% of Baby Boomers answered correctly, that millennials would get the best rates. By comparison, only 33% of millennials understood that they stand in prime position for the lowest rates.  That’s right, two-thirds of millennials do not know they are in the best position to lock in the cheapest premiums! 

The point of life insurance is to protect those people who are financially dependent on you. Traditionally, that includes a spouse or children, both of which represent life stages that millennials are delaying until later in life.  However, life insurance also covers parent beneficiaries who may have co-signed on a loan for you and would be held responsible for your financial contributions to pay off your debt should the worst happen.

For a generation with information at their fingertips, who comparison-shops and lives for the deal, it is surprising to find how out that they are missing such a great savings opportunity.  You will never be as young as you are today so it is time to lock in a rate now while it is cheaper.  Trust me, your future self will thank you for it.

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Pay special attention to the next-to-last paragraph! Re-read it if you're still not sure whether life insurance would be a good option for you!

Does somebody depend on you financially? Did your parents co-sign your student loans? If your answer to either question is 'yes,' then you should consider life insurance.

Specifically, check into a term-life policy. Term life insurance is usually cheaper than whole life insurance, and in most cases, it's a better fit for people's needs. Though I've criticized Dave Ramsey in the past and am generally skeptical of "gurus," I'm mostly in agreement with Dave Ramsey, Suze Orman, and many other financial experts that you'll be better off to "buy term and invest the difference." However, this assumes that you'll actually maintain the discipline to invest the difference...

If you're interested in taking HealthIQ's quiz, here's the link again.