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Insurance and protection, Personal finance June 3, 2024

Insuring millennial moms and dads

Why life insurance should matter to young parents

When you’re young and healthy, the last thing on your mind is life insurance. You’re enjoying those everyday moments — making plans on how to spend your time, not what to do if it’s cut short unexpectedly.

The fact is, life insurance matters, no matter where you are in life. Millennials, who are between the age of 24 and 40, are at a time in their lives when they need life insurance. The majority of millennials are married, have dependent children, own homes, and have more than $100,000 in household income. Yet more than half (55%) of millennials have no life insurance coverage at all, putting their loved ones at risk of financial hardship should they die unexpectedly.1

Without sufficient life insurance coverage, your family, your most important asset, may suffer from financial hardship should you pass away. Dealing with grief at any stage of your life is hard, but dealing with financial stress on top of grief can make it that much harder. Proper coverage can help alleviate the financial stress.  

Why life insurance is important for young parents

Caring for children’s basic needs — like food, clothing, and shelter — gets more expensive with each passing year. Add to that the costs of daycare and schooling.

Life insurance can help pay for these expenses, perhaps even paying off a mortgage or covering your child’s education in its entirety.

Most importantly, life insurance can help your family maintain its current lifestyle during emotionally hard times. You don’t want your loved ones to worry about financial issues too.

Life insurance hurdles

So why don’t more millennials have insurance?

1. The knowledge factor

Life insurance isn’t as complicated as it might seem. To put it simply life insurance is a contract (policy) between the insurer (life insurance company) and policy owner (you) who pays the insurer a premium to insure your life.2 If you die while the policy is in effect, your beneficiary (spouse, children, etc.) receives the death benefit.3

There are two types of insurance: term and permanent. Term insurance is generally the less expensive option and is in effect for the length of the specified term (usually 10, 20, or 30 years) in which a set premium is guaranteed. Once the term is over, so is the insurance coverage. Consider a term that would allow you the time needed to pay off your children’s expenses as well as provide enough savings for your spouse.

Permanent life insurance may provide coverage for your entire life and offers the potential to accumulate cash value tax-free. This cash value can be used on a tax-advantaged basis throughout your lifetime for expenses like travel, college tuition or supplemental retirement income.4

2. The cost factor

Millennial parents are often very budget conscious and juggle several financial priorities.1 Forty-four percent of millennials estimated the cost of a 20-year term life insurance policy for a healthy 30-year-old would exceed $1,000 a year, yet it’s actually about $165 a year.5

3. The time factor

Working and caring for your family doesn’t leave you a lot of time for much else. That’s why it’s important to know that you can do research online or call a financial professional or advisor when it’s convenient for you. You also have the option to purchase a policy that doesn’t require a medical exam or testing (such as guaranteed issue or simplified underwriting).

Steps to take to get life insurance

Your work might offer free life insurance. If it does, take advantage of it. Just note that it’s probably not going to be enough coverage for your family’s needs. Group life insurance amounts vary by employer and may be low. Also, if you leave your employer, this insurance doesn’t usually go with you to your next job. So, you’ll need additional insurance to subsidize it.

Look into life insurance. You might be able to buy it from your employer who has already taken the time to research carriers and products. And you might not need to supply your medical information, if you’re a new employee.5 However, given your young age, you might find less expensive coverage on your own.

Life insurance is an important investment in your family and you want to be sure you’re getting a policy that serves your needs. So, don’t be afraid to talk to a financial professional — in person or over the phone — to help you understand what you need to do today for your family, so you don’t have to worry about tomorrow.

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1. LIMRA. "It’s Time to Help Get More Millennials Insured". July 6, 2022.

2. Policy owner and the insured may be different people.

3. If owner/insured are different, the death benefit will be paid upon the death of the insured. 

4. Create an adverse tax result in the event of lapse or policy surrender and will reduce both the surrender value and death benefit. Withdrawals may be subject to taxation within the first fifteen years of the contract. You should consult your tax advisor when considering taking a policy loan or withdrawal.

5. “2024 Insurance Barometer Study,” Life Happens, LIMRA, April 24, 2024.

Life insurance products contain charges, such as Cost of Insurance Charge, Cash Extra Charge, and Additional Agreements Charge (which we refer to as mortality charges), and Premium Charge, Monthly Policy Charge, Policy Issue Charge, Transaction Charge, Index Segment Charge, and Surrender Charge (which we refer to as expense charges). These charges may increase over time, and these policies may contain restrictions, such as surrender periods. Policyholders could lose money in these products.

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