The Essential Insurance Policies Every Millennial Should Have
3 min read
Contrary to popular belief, life insurance should not only be seen as a financial concern for older individuals with dependents. Life insurance can help millennials manage student loan debt more efficiently while offering retirement security or protecting entrepreneurial ventures.
Life insurance policies with cash value components that accumulate over time may also appeal to millennials who prioritize affordability and flexibility.
1. Life Insurance
Life insurance provides protection that pays off debts and provides income replacement in the event of death, as well as helping protect millennials against other major financial obligations such as student loan debt, mortgage payments and end-of-life costs. Many millennials may already have job-based life policies in place but these may not offer enough coverage as their needs change over time.
Personal life insurance policies offer an effective solution to millennials looking to protect their family against financial hardship and leave a legacy. Furthermore, policies like term and ULIP plans can build cash value tax-deferred over time, serving as a source of liquid capital to achieve goals such as buying a home or funding children’s education as well as supplementing retirement savings. Furthermore, life insurance also plays an essential role in estate planning, helping millennials transfer wealth according to their wishes – so make sure to shop around to find a plan suitable to your unique situation and budget!
2. Disability Insurance
Disability insurance provides protection to your income if an illness or injury keeps you from working, supplementing the Social Security disability benefits that might otherwise come your way. While Social Security’s definition of disability is more difficult to meet and monthly benefits may be lower than with long-term policies.
Individual disability policies are available through financial professionals and typically provide tax-free benefits if purchased with after-tax dollars. Individual policies are ideal for small business owners, certified professionals self employed on their own and individuals who cannot get group coverage through their employer.
Individual disability policies provide several features that can enhance your protection, including shorter elimination periods and higher benefit amounts compared to group coverage. You can also purchase optional riders – like cost of living adjustments – at an additional fee to further customize your policy; such as adding one that will ensure your benefit increases over time to account for inflation.
3. Auto Insurance
Millennials may be young and healthy, but that doesn’t mean they should forego insurance policies. Car insurance is essential as most states mandate it; life insurance can help provide funds for funeral expenses or debt repayment; whole life policies also accumulate cash value over time and serve as savings vehicles.
Online quotes allow millennials to obtain affordable auto insurance by searching for discounts. Such discounts could include being an “excellent student”, driving safely, avoiding accidents and bundling policies (such as renters or home insurance policies). They could also enroll in usage-based car insurance plans like Metromile’s pay-per-mile plan that offers significantly discounted rates to drivers who drive less miles each month.
Millennials should search out companies that are transparent with regards to insurance scores and rates. Say Insurance provides such transparency by disclosing your insurance score when applying for policies as well as giving tips on how to improve it.
4. Home Insurance
Millennials are entering homeownership at an unprecedented pace, and to protect their investments they will require property/casualty insurance coverage. It is essential that they become informed of the differences between homeowner and renters policies as well as what specific coverage comprises their specific policies.
Homeowners insurance isn’t legally mandatory, but most lenders require it in order to finance a mortgage loan. Of those holding policy, three-quarters expect their premiums to increase this year – with millennials most likely expecting increases, followed by baby boomers and six-figure earners.
Homeowners living in flood zones, with historic properties or recent expensive renovations may require special insurance policies. Other factors affecting their premiums could include location, age and construction materials of their house as well as natural disaster risk in their area. Thankfully, many insurers offer options that help policyholders manage rising premium costs; such as discounts for having safety features installed or lowering deductibles and providing extra coverage such as jewelry or collectibles.
