Life Insurance: Here’s What Millennials Should Know

No one wants to think about their death, especially when they are in their 20’s and 30’s. But life goes by very fast and in a very short while, you have a family that depends on you. Although it is depressing to think about what will happen to them when you pass, it is important to be prepared. Getting a life insurance policy is the best way to be prepared, ensure your loved ones are taken care of once you pass, and ensure continuity to their standard of living.

Choosing the right insurance is difficult, so here are a few things to help you get started.

When Should You Buy Health Insurance?

If you are single and in your 20’s and 30’s, you probably do not need life insurance cover just yet. However, there is an exception. If you have co-signed any loans with someone else, such as your parents, they may be obligated to pay this debt upon your passing.

If you support other family members, you also need to think about what will happen to them when you pass.

If you are married, you more than likely need life insurance. As above, it can help pay off some of your debt, so your spouse and kids do not have to.

Also, it is cheaper to buy life insurance when you do not have any kids yet. Remember that the premiums you pay will depend on your age and how healthy you are, and if you are yet to have kids, you likely are young and relatively healthy and will benefit from a much cheaper policy.

If you are married with kids, you definitely need life insurance so that your co-dependents can handle expenses and keep a relatively stable lifestyle.

What Kind of Life Insurance Do do You Need?

Even when you know when to buy life insurance, you still need to think about the type of insurance you need. Because there are so many insurance options in the market, it can be difficult to know what type of insurance is the best for you. Before drilling down on the different types of life insurance in the market, it is important to understand the difference between term and permanent life insurance.

Term life insurance covers you for a number of years, usually 10, 20 or 30 years. If you pass away during this term, the insurance will pay out. Once the term expires, your coverage ends, and the insurance company will not pay anything to your dependants.

Permanent life insurance does not have a term limit. Some insurance options, such as whole life insurance, also act as a savings account where your policy attracts interest.

Then there are medically-related life insurance policies. It is important to remember that insurance companies price your premiums depending on how much of a risk you are. If you have any underlying health conditions, such as a diagnosed mental condition, you will need an insurance policy that is in line with the condition you have been diagnosed with.

Depending on the condition, you might need general mental health life insurance, anxiety life insurance if you have been diagnosed with anxiety, and depression life insurance if you have been diagnosed with depression. You could also consider a viatical settlement from American Life Fund which allows someone diagnosed with a life-threatening illness to sell their life insurance policy for cash.

A doctor consulting with his patient

If you are shopping for insurance right now but fear that you might need to talk to a mental health specialist due to the restrictions, social distancing measures and self-isolation brought about by the COVID-19 pandemic, consider getting mental health life insurance instead of any other life insurance policy. This way, you know any mental health condition you are diagnosed with will not restrict a pay-out in case you pass away.

When shopping for this type of insurance, remember to consider your insurance options carefully and compare them to find the best one for you. I’m Insured has an amazing tool that lets you compare insurance quotes from over 200 insurance providers. I’m Insured will also help you compare life insurance policies if you have other health conditions such as diabetes and high blood pressure.

How Much Insurance Do You Need?

Now that you know when to take out an insurance policy and the type of insurance you need, you need to think about how big the policy should be. Most policies range from £250,000 to £1,000,000. How much you need will depend on how the money paid out will be used. If you need it to cover funeral costs, for example, you do not need a huge policy. If you need it to cover your mortgage and college expenses, then you need a much larger insurance policy.

As a general rule, you should take out five times your annual pay if you do not have kids and ten times your annual pay if you do have kids.

Life insurance is confusing in itself, but it can be a lot more confusing if you do not know where to start, what types of policies exist, and how big of a cover you will need. It is always a good idea to talk to an insurance expert who you trust to give you the best advice and avoid salespeople because they will only tell you what you need to hear so they can sell you a policy.

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