Why Students Should Be Thinking About Life Insurance Now

Misunderstanding: Several millennials believe they are too young to be concerned about life insurance. They perceive it as a matter to consider in older age or following important life milestones such as getting married or becoming a parent. 

Truth: In reality, being young and healthy can result in lower life insurance premiums. Additionally, no one can accurately foresee the uncertainties of life, so having a financial safety net can benefit both the person themselves and their loved ones. While there are opportunities to purchase life insurance at every age, purchasing when young assures that you will pay far lower premiums.

Misunderstanding: Many people believe that the price of life insurance can prevent younger individuals, especially millennials who have to manage student loans, rent, and other financial obligations, from getting coverage.

Truth: Reasonable choices are available, particularly for individuals who are young and in good health. Term life insurance, for instance, can be a financially viable method to obtain significant protection.

Misunderstanding: Numerous individuals from the millennial generation believe life insurance is solely important if you have people who depend on your financial support.

Truth:  Regardless of your marital status, if you were to pass away unexpectedly, it could place a financial strain on your loved ones. This could include expenses like funeral costs, any unpaid debts, or even outstanding educational expenses. To mitigate these burdens, having a life insurance policy could provide the necessary financial support.

Misunderstanding: Some millennials believe having life insurance through their job is enough.

Truth: In actuality, life insurance provided by employers frequently provides a sum of money that is a certain multiple of your yearly income. However, this amount may not be sufficient to meet all of your financial requirements. Also, it is important to note that this coverage typically terminates once you cease to work for the company.

Misunderstanding: Many young and healthy millennials believe they do not require life insurance immediately because of their age and good health.

Truth: Life insurance is more affordable and simpler for individuals who are young and in good health. However, if you were to acquire a medical condition in the future, your insurance premiums may significantly increase, or you may not even be eligible for coverage at all.

Misunderstanding: There is a belief among certain individuals from the millennial generation that life insurance can serve as a means to invest their money to secure future monetary prosperity.

Truth: While some life insurance policies have an investment feature, they should not be considered a replacement for a well-spread investment portfolio. The main goal of life insurance is to offer financial protection in case of a premature death.

Misunderstanding: Millennials, influenced by the technological advancements of the digital era, mistakenly believe that the availability of online will and estate planning services renders life insurance unnecessary.

Truth: Online will services can assist with estate planning but they do not provide the same level of financial security and assurances that a life insurance policy can offer to an individual and their loved ones.

Life insurance provides a strategic tool for effective estate planning, financial security, final expenses and ensuring that your loved ones are taken care of.  Here is a closer look at how life insurance can provide stability and protection: 

1. The current phase of their lives finds millennials typically embarking on career paths. Suppose they have people who rely on them or intend to have dependents down the line. In that case, life insurance guarantees these individuals financial security if the main breadwinner unexpectedly passes away.
2. Estate planning is useful for Millennials who have begun acquiring assets such as homes or investments. They can employ life insurance to ensure a financial legacy for future generations.
3. Final expenses such as funeral or medical bills can be a heavy financial burden for families, regardless of the person's age. However, families can alleviate this burden by using a life insurance policy payout to cover these costs.
4. Having peace of mind comes from the reassurance that your loved ones will be financially protected if something happens to you. It is a way to show love and support for your family, even when you are not physically present.

While there are some instances where student loans are wiped clean in the event of a passing, that is not always the case.  A life insurance policy can help to handle your outstanding debts in a number of ways.

1. Federal Student Loans in Canada are typically eliminated if the borrower dies, preventing their family members from inheriting the debt. Nevertheless, proof of death, like a death certificate, will be necessary to clear the debt, which can be emotionally and administratively challenging during a tough period. To alleviate the strain on loved ones, having a life insurance policy that can provide extra financial assistance for expenses related to the end of life or any outstanding debts would be beneficial.
2. Private student loans may not provide the same level of forgiveness. In the event of your death, if someone has co-signed your loan, they may be obligated to pay back the debt. To alleviate this financial responsibility, life insurance can protect the co-signer.
3. Any personal debt you possess will be transferred to your estate, potentially decreasing the amount you intend to pass down as an inheritance. By acquiring a life insurance policy, these debts can be handled, guaranteeing that your loved ones receive your assets rather than creditors.
4. Life insurance can protect millennials who have bought a home or have taken out large car loans, ensuring that these financial obligations are taken care of and not passed on to their loved ones.

Life insurance premiums are more affordable for the young and healthy, ensuring financial feasibility. By securing rates early on, you can potentially build cash value, making purchasing a policy a smart financial decision for lasting protection. 

1. One major benefit of buying life insurance at a younger age is affordability. Typically, life insurance premiums are more budget-friendly when you are in good health and younger, as the insurer perceives less risk.
2. Numerous life insurance policies allow you to secure your rate for a long time. This implies you can continue paying the same reduced rate for two to three decades.
3. Getting approved for a life insurance policy is typically easier when young and healthy. If you develop a medical condition later on, obtaining coverage may become more challenging or costly.
4. For those interested in whole or universal life insurance, beginning your policy earlier will allow more time for it to build up a cash value. This cash value can then be used as an extra financial asset.
5. By recognizing these factors, millennials can make a well-informed choice regarding buying life insurance, realizing that it is not solely intended for older individuals but a smart financial decision for nearly anyone who desires to prepare for life's uncertainties.

Tailored for specific durations, such as 10, 20, or 30 years, it guarantees benefits only if the insured passes away within the chosen timeframe. This straightforward coverage provides a cost-effective solution, offering financial security during critical periods. While lacking the cash value accumulation seen in some other policies, term life insurance remains a popular and accessible option for those seeking reliable protection without the complexities of lifelong commitments.

Reasons Millennials Might Benefit: This option is typically affordable for young and healthy individuals. It offers significant insurance coverage for a lower monthly payment, enabling millennials to easily manage their financial responsibilities, such as student loans, rent, or mortgage payments.

Whole life insurance, distinguished by its lifelong coverage and stable premiums, encompasses an additional advantage—accumulating cash value. This unique feature not only enhances financial security but also offers potential growth over time, functioning as a valuable asset. Policyholders find comfort in the dual benefits of lifelong protection and the opportunity for their coverage to evolve into a substantial financial resource.

Advantages and disadvantages: Although more costly, it functions as both a monetary cushion and a chance for investment. The cash value element can be used as collateral, offering financial flexibility. Nonetheless, the increased premium payments may burden certain young adults, particularly those in the early stages of their professional lives.

Universal life insurance is a type of permanent life insurance that offers more flexibility. It allows policyholders to modify their premium payments and death benefits according to their needs. In addition, the cash value portion of the policy earns interest at a rate determined by the insurance company.

Is It Appropriate for Millennials? Universal life insurance could be a suitable option for those seeking a combination of flexibility and potential for growth. This type of insurance is particularly well-fitted for millennials who prefer to start with less coverage and have the flexibility to enhance it in the future, such as when they start a family or buy a house.