In “Star Trek” lore, a Vulcan salute – hand raised, palm forward, fingers split to form a V – is accompanied by the words, “Live long and prosper.”
When we’re younger, the future can seem boundless. Even though we know life doesn’t last forever, we often don’t address it in practical terms.
In other words, life insurance isn’t likely to be top of mind. And most millennials (roughly anyone born between 1980 and 1995) wildly overestimate the cost of life insurance.
Only 52 percent of millennials have life insurance, according to LifeHappens.org, an educational nonprofit formed by seven leading insurance companies.
The 2017 Insurance Barometer Study by Life Happens survey found that when survey respondents were asked how much a $250,000 term-life policy for a healthy 30-year-old would cost each year, the median estimate was $500. Millennials put the cost at $1,000 or more.
The actual cost: $160.
'Big shopping advantage'
Given their relative youth and health, millennials typically get better life insurance rates than any other age group.
“Millennials have a big shopping advantage now because prices go up with age, as life expectancy decreases and the chance of developing health problems increases,” according to an article by the personal finance website Nerd Wallet.
Getting married, having children, buying a home “are common triggers for buying life insurance,” according to the article.
When pondering life insurance, a financial planner said, ask this question: “Would someone be financially worse off if you died tomorrow?” If anyone depends on your income or would have to pay your debts, then the answer is yes.
Erie Insurance’s Eriesense blog compiled six benefits of life insurance for millennials:
1. Insurability. Coverage is easier and less expensive as a healthy millennial than applying after being diagnosed with a health condition.
2. Lower costs. There’s less risk associated with someone in good health, and life insurance premiums are risk calculations based on mortality.
3. Dependents. Dependents include a spouse, children, live-in partner with whom you own a house, a relative with special needs or a loved one whose long-term care you contribute to.
4. Savings. A permanent life insurance policy that has a death benefit and savings component that you might be able to borrow against and use in retirement.
5. Supplemental coverage. If you become sick and can’t work, your company life insurance policy will no longer cover you. If you’ve been diagnosed with a terminal illness, you may not be able to secure life insurance. And a basic plan may not cover all your family’s needs when they are providing for themselves.
6. Funeral expenses and debt. The average funeral costs $10,000 to $15,000. While some debts would be waived, others would be collected from the assets you leave behind.
None of us knows how long we will live. But with life insurance, we can ensure that our loved ones are able to prosper even after we’re gone.