Top 10 Reasons Why Millennials Should Consider Buying Whole Life Insurance
Most millennials know they need life insurance at some point. But getting a policy tends to get pushed to the back-burner.
That's likely because millennials are facing so many other financial challenges, such as paying down student loan debt and saving for retirement.
It's understandable to think you don't need life insurance when you're young and healthy. But, in reality, you have many good reasons to purchase life insurance at this point in your life. This is especially true if you are looking for an affordable way to grow and save money towards your retirement.
Keep reading for our top 10 reasons why you should consider whole life insurance now.
1. It is Cheaper
You know you're young and healthy. So do insurance companies. They realize healthy millennials are a low-risk client so your life insurance policy is considerably cheaper than your older counterparts.
If you don't smoke or have any pre-existing health conditions, you can get surprisingly cheap rates. But if you wait until your thirties or later, you'll find the monthly cost will be significantly higher.
It's best to lock in a good monthly rate now that will continue for the life of your policy. That's how you can save money in the long run.
2. It Builds Cash Value
It's never too early to start thinking about retirement. In fact, the earlier you start saving, the more money you will contribute to your nest egg.
With whole life insurance, a portion of your monthly premiums accumulates as a cash value, which acts as a savings account. Your cash value will continue to grow with each monthly payment.
You can use your cash value as retirement savings. You can even borrow against the cash value tax-free for any reason. This is especially helpful if you want money for a down payment on a home or for an emergency.
You will have to pay back the loan with interest, but the interest rates are usually considerably lower than on a bank loan or credit card. Plus, you have no minimum monthly payment on the loan.
3. Don't Leave Your Debts to Your Family
Many millennials are strapped with exorbitant student loan debt. And if your parents cosigned for a loan or took out a PLUS loan that you make payments on, they will be on the hook if you were to pass away.
Or perhaps you already have a spouse with which you share a credit card or home loan. These debts would fall on them to pay off in the event you suddenly pass away.
Don't burden your loved ones with debt. Make sure you have enough whole life insurance coverage to meet their financial needs if the unthinkable were to happen.
4. Don't Stick Your Loved Ones with Funeral Expenses
Funerals are expensive. The average funeral costs between $7,000 and $9,000 and that amount does not include the cemetery, monument or marker, or flowers.
A relatively small life insurance policy can ensure you don't burden friends and family with funeral expenses.
5. More Time to Grow Your Money
It is more important than ever for millennials to start saving for retirement early. That's because life expectancy is now longer than in previous generations. It stands to reason, then, you must save more money as you plan for a longer retirement.
That means the earlier you start, the more cash value you will have to supplement your retirement income. In fact, those who save as little as $5,000 every year starting at age 25 could be millionaires by the retirement age of 65.
6. Supplement Your Employer's Insurance
Even if you have life insurance through your employer's benefits package, that insurance might not be enough and purchasing a separate policy may be wise.
Consider what would happen if you had a serious health issue and were unable to work. Would your employer's health insurance provide enough money to meet your needs? What if your work policy lapses?
A supplemental insurance policy could cover you in case you are laid off or if your employer goes out of business. And the right whole life insurance would allow you to borrow against the cash value to cover medical costs if you lost your health insurance for any reason.
7. Protect Your Family
Some millennials are getting an early start getting married and maybe even starting a family.
Having life insurance is the perfect investment to make sure your wife or husband will be taken care of if you pass away.
Along the same lines, insurance can provide for your children and ensure they can go to college if you die.
8. Lock Your Premiums
Permanent whole life insurance offers level premiums. That means your rate will never go up.
You can save money in the long term by locking in low rates today versus purchasing a policy 10 years from now.
As long as you continue making monthly payments, your whole life insurance rates will stay intact. You could keep the same rate for the rest of your life as long as you make timely payments each month.
9. Good for the Young and Wealthy
Whole life insurance is a popular estate planning tool for families accumulating wealth in their 30s and 40s. You can create an insurance trust to pay estate taxes from the proceeds of the policy. You can then pass the trust on to your heirs.
Consult with an insurance company such as Vantis Life and an attorney specializing in trusts to start your estate planning.
10. Worthwhile for Entrepreneurs
From business partners to employees, a lot of people count on you when you own a business.
Consider whole life insurance if you own a business and want to ensure its continued success if something happens to you. Your policy offers a safety net that will pay off personal and business debts so your business can continue to thrive.
Final Thoughts on Whole Life Insurance for Millennials
You may not feel like you need whole life insurance now, but you should consider it as part of your financial plan.
You can build up retirement savings that you can borrow against. And the earlier you start, the more time you have for compound interest to exponentially grow your money.
A whole life policy will also financially protect your friends, loved ones, and even your business no matter what happens to you.