Life Insurance isn't for you – it's for those you leave behind. Without sufficient insurance, your family may endure financial hardships on top of the shock and grief caused by your passing.
According to a recent survey from the online life insurance start-up Bestow, many people aren't convinced enough of the benefits of life insurance to have coverage. Approximately 70% of Americans admitted to not having a personal life insurance policy, including 75% of parents in the millennial generation.
The large coverage gap for millennial families is particularly disturbing, since this is exactly the time in life that life insurance is most important. Their children are younger, they have had less time to build up sufficient assets and savings for emergencies, and many are likely dealing with debt (especially student loan debt). The Great Recession instilled sound financial practices and budgeting skills, but life insurance appears to be a blind spot.
Why do millennials choose to avoid life insurance? Cost was the primary factor, according to Bestow, but there is a significant convenience factor involved. Millennials indicated a greater likelihood of acquiring life insurance if it could be done online without a medical exam and for an affordable price.
Even so, there may be a threshold value of importance that isn't getting through to millennials. Two-thirds of millennial parents believe that they haven't got the time to sift through the options, and generally they won't devote more than two hours to the process. Two hours isn't much time to devote to something so important – and we would bet that millennials spend far more time debating far more trivial decisions.
A lack of understanding may be compounding the problem. A separate survey from Anthem in 2017 found that only 53% of millennial respondents claimed to understand life insurance coverage and the benefits that it provides. Yet another study by Life Happens and LIMRA found that 73% of millennials consider life insurance to be too expensive, but 80% of respondents overestimated the actual cost – with 40% guessing too high by a factor of five.
According to the Life Happens survey, 80% of respondents wanted coverage that was easy to understand, and 70% wanted to speak to someone about their life insurance needs. When asked their reason for not buying life insurance, half of respondents simply said that nobody had ever approached them about the topic.
In the Anthem study, only 39% thought that it was important for employers to provide life insurance options. That's logical given the collective survey results. If you don't understand the benefits, much less the options, and nobody ever approaches you about the impact of not having life insurance, why would you consider life insurance as an important employee benefit?
The collective studies show that millennial parents aren't buying insurance due to basic misunderstandings about life insurance and how it works, concerns about time and convenience, and a general unwillingness to consider your own death. Nobody enjoys thinking about dying prematurely, especially young millennial parents dealing with the daily hassles of parenthood, but it's important to do so.
Granted, if you are a harried millennial parent it's hard to find any spare time at all – and you want to spend the time that you do have in more enjoyable pursuits than poring over your life insurance options. Take the time anyway and find a life insurance policy that fits your needs. It's the responsible thing to do to protect your family.
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