If you are in your 20s or 30s, life insurance may be the last thing on your mind. However, many of your fellow “millennials” are realizing that now may be the absolute best time to buy life insurance.
In fact, overall, life insurance applications for Americans have jumped in 2020. The COVID-19 pandemic has made us more aware of our own mortality. This increased interest in getting life insurance now seems especially high among younger adults under 40.
That is a good thing because the younger you are when you apply for life insurance, the less expensive it will be. Buying now rather than later can help you save significant money. The older you get, the more risk you pose to your life insurance company. The result is that a policy for a 25-year-old is likely to be much less expensive than the same coverage for a 45-year-old. Many millennials do not realize this. They do not think about buying life insurance when they are young and healthy, but that is exactly when it is the best time to buy.
Here are some other things to think about if you are shopping for life insurance for the first time.
Plan For Tomorrow, Not Today
The key in buying life insurance, especially for a young person, is to “plan for tomorrow, not today.” In other words, you may not have a wife, kids, or a house payment right now, but you will in the future. So, plan for a benefit amount that will be enough to cover those future expenses, even though you may not need it now. Generally speaking, you should have a benefit amount that is at least 10x your annual salary.
Try to Skip the Medical Examination While You Can
There was a time when everyone had to have a medical exam and fill out a very long and tedious application when buying life insurance. Today, many insurance underwriters offer “accelerated applications” which do not require a medical exam and can be filled out online. Younger buyers are far more likely to qualify for and obtain coverage with these “no exam required” policies. The older you get, the more of a hassle the application process can be. This is another reason for millennials to shop now for life insurance.
Many millennials may not realize the value of buying life insurance while they’re young and healthy. Research by the life insurance trade group LIMRA shows that half of millennials overestimate the cost of coverage. Only 52% own life insurance, even though 80% recognize they need it, according to LIMRA.