In a Nutshell: A recent survey conducted by health benefits provider Anthem, Inc. revealed a somewhat startling trend in how millennials view their financial futures. A key aspect of the study found that only 39% of millennials believed that life insurance offered as part of an employer-provided package was an important benefit. In 2015, millennials surpassed baby boomers as the largest generational demographic in our country. If this emerging generation has a different view of important financial issues, such as the value of life insurance, it could have a major impact on segments of our economy, like healthcare, financial planning, and, of course, the insurance industry.
It’s an easy concept to understand — the younger and healthier we are, the less thought we tend to give to our financial preparedness over the long term. This is apparently the case with the millennial generation (those born between 1982 and 2004, give or take, depending on who you ask). A March 2017 survey conducted by the health benefits provider Anthem, Inc. found that only 39% of millennials believed it was important for an employer to offer life insurance benefits to its employees.
Some of the ways in which millennials view work and their participation in the economy are in stark contrast to previous generations, as the values many millennials proclaim tend to be more pragmatic in nature when compared with other age groups. For example, 63% of millennials believe their employer should contribute to social or ethical causes, compared to about 50% for older generations. In addition, 64% of millennials would rather make less money at a job they love than make twice as much at a job that’s boring.
With millennials set to comprise as much as 75% of the workforce in our country by 2025, according to the Brookings Institute, we are just beginning to see just how much of an impact their actions will ultimately have on the economy.
And that impact includes their feelings about life insurance. The value of life insurance has traditionally been recognized as protection for family and loved ones left behind. In addition to funeral costs, it covers things like paying off debts, settling estate taxes, even replacing a lost income so that the family remains comfortable. Unfortunately, younger people tend to see themselves as strong and healthy, and therefore not in need of life insurance. This appears to be especially true for the millennial generation.
Nick Brecker, president of Specialty Business at Anthem, was quoted in the report as saying, “Millennials may be underestimating the security that life insurance offers them. This benefit is a key way to protect the homes and families of their future. In the best case, life insurance offers absolute peace of mind for a family. In the event of tragedy, it ensures that no more debt is heaped on loved ones.”
Millennials’ Plans for the Future are Missing Key Protections
Life insurance protection doesn’t just impact individuals and families, it affects us all indirectly. With the loss of income from a provider, a family’s participation in our economy can change dramatically. And since millennials will comprise more than one in three adult Americans by the year 2020, their choices will have more impact on our economy than any generation in half a century.
In addition to their views on life insurance, the Anthem survey also disclosed some of the things millennials say are important to them in the future. These include the desire to get married (70%), to have a family (74%), and to own a home (93%). Given these aspirations, it seems hard to reconcile why more of the millennial generation would not want to prepare for their financial future by having life insurance.
Planning for future financial wellness may, in fact, be more a matter of age than of any generational characteristics. It’s hard to say whether the baby boom generation took a similar view of financial planning when they were the same age millennials are now. However, no other generation has ever had the access to information and research that millennials do. This alone should remove any reasons for not planning ahead.
Why Life Insurance Should Matter to Millennials
Admittedly, thinking about life insurance as a young adult may not feel like a high priority. There are too many things that are far more likely to occur than an early demise. However, the value of the protection that comes with having life insurance simply can’t be ignored.
The fact that an overwhelming majority of the millennial generation wants marriage, family, and home ownership, yet only 39% believe life insurance is important, is troubling. If a partner dies without life insurance, any mortgage or other large debt falls onto the surviving partner. Paying a mortgage on two incomes is hard enough, but with only one, it’s likely to be too much.
One thing that millennials should take into consideration is that the younger and healthier a person is, the cheaper it is to obtain life insurance coverage. This is true no matter what type of policy you choose. Buying life insurance when you’re in your 20s is a far better bargain than buying it in your 40s or 50s.
Financial Preparedness is Affordable with Proper Strategy
Knowing about the different types of life insurance can help clear up confusion and make it easier for younger people to make a better-informed decision. According to the Insurance Information Institute, there are two basic types of insurance policies to choose from.
Term life insurance covers a specific period of time, after which it expires. This type of policy is generally more affordable because it only pays out if the covered individual dies during the term of the policy. On the other hand, permanent or whole life insurance covers an individual for the entirety of his or her life. This type of policy often has a savings or cash-value accrual component as well, making it more of an asset than term life. Because of this, permanent life insurance is almost always the more expensive of the two.
Buying insurance for a limited but important period of time — say until kids are in college or a mortgage is paid for — can be surprisingly affordable. A term life insurance policy for the length of a mortgage can offer a way to ensure the house is paid for in the event of a tragedy.
Life insurance premiums, especially for term life policies, can be an attainable and valuable safety net for millennials. Considering that the monthly cost of that specialty coffee drink at your favorite spot can be as much as $65 (or more), cutting back on that expense just a little can free up enough cash to pay the monthly premium on a term life policy.
So, the next time you’re prioritizing your expenses and trying to consider what’s really important, think about the long term. Preparing for future financial wellness isn’t as hard as it may seem. When we take into consideration what’s at stake — and the value of protecting the future of our loved ones — the choice to sacrifice a little now for long-term benefits becomes easier.