Millennials have immense spending power, but they don’t tend to use it on life insurance policies
This year saw Millennials overtake the Baby Boomer generation to become the largest age demographic in America. Numbering just over 70 million at the last U.S. Census Bureau estimate, Millennials are projected to have a spending power of $1.4 trillion annually in 2020 and generate 30% of all retail sales.
The business world centers around the Millennial market right now, with everything from clothing and technology to real estate and medicine being driven by the demographic’s preferences. But one area where things aren’t so Millennial-centric is life insurance.
The reason: while Millennials find the cash to fund many needs (and luxuries), the cost of life insurance is being filed under “things that can wait.”
The financial barrier between Millennials and life coverage
Mortality is less of a pressing concern for younger age demographics, and Millennials aren’t giving life insurance much consideration when it comes to priorities. After all, they already have some very pressing financial concerns. Last year saw this generation burdened by $497.6 billion in student debt, which breaks down to roughly $33,000 for each impacted borrower.
When all Millennial debt is considered, the figure is staggering: over $1 trillion, according to the New York Federal Reserve. This makes Millennials the most in-debt generation in history. This financial burden, coupled with mortality being a problem for another day, means Millennials aren’t clamoring for life insurance policies. But this is just one of the issues in play.
The Millennial mindset creates insurance hurdles
Millennials are spending hundreds of billions every year. But they don’t like “being sold to” and harbor a deep skepticism of salespeople. This generation especially dislikes it if they feel the product being pushed isn’t beneficial to the community or the world. Insurance salespeople already have a less-than-stellar public image, being viewed by many as some of the pushiest sellers around.
Millennials could become more receptive to life insurance if they understood it as something that benefits others, regardless of their age. Even if a younger individual doesn’t have children or extensive assets when they pass away, their family will be left to foot the bill for funeral expenses and outstanding debt.
Then, there is the matter of cost. The belief that decent coverage is too expensive is a significant barrier to life insurance regardless of age demographic. But Millennials are uniquely positioned to obtain inexpensive policies.
Millennials can get highly-affordable life insurance
The younger a person starts life coverage, the more favorable position they’ll be in over the long term. This gives Millennials a head start over older generations, but it’s an advantage many are missing out on. Let’s provide an example that samples the younger end of the Millennial scale (25 years old) and the youngest Baby Boomer (55 years old).
Assuming each individual takes out a $500,000 term life insurance policy with no pre-existing conditions and no smoking or drinking habits, the savings for Millennials are significant. The Baby Boomer would be paying about $146.39 per month, while the Millennial would only pay $25.67. Even into an individual’s late 30s (which is considered the cut-off point for Millennial status), the average monthly life insurance fee only increases by about $13.
It’s forgoing coverage until after that age that presents a big problem for Millennials. Their reluctance to consider life insurance can cause them to waste the most affordable insurance years of their lives. A policy that’s obtained early can set more affordable rates for the future.
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