Young adults have an advantage when it comes to life insurance because of their extended life expectancies, which usually qualify them for low-cost coverage. Despite this benefit, a new ReliableInsurance survey found that younger generations are more inclined than their elders to be hesitant to purchase coverage.
Sarah Fitch, a 23-year-old communication specialist from Ohio, finds the prospect of purchasing life insurance overwhelming. “I’m afraid of getting the wrong policy or not getting enough coverage or getting an overpriced policy for low coverage,” she tells me.
According to the survey, 86% of Generation Z (years 18 to 25) and 77% of millennials (ages 26 to 41) are hesitant to purchase life insurance, compared to 76% of Generation X (ages 42 to 57) and 70% of baby boomers (ages 58 to 76). The Harris Poll conducted the study online in February 2022, with over 2,000 persons 18 and older from the United States participating.
Fitch says one of her primary concerns is the cost of coverage. According to the survey, 27% of Americans are concerned about being able to afford monthly premiums, making it the most generally selected doubt. Fitch is also hesitant to buy since she lacks expertise about life insurance and does not have the time to conduct study.
“It’s not something I guess that 20-year-olds think that they need to do right now,” said Fitch, “even though it’s very important and should be discussed, especially at a young age.”
Fears about getting it wrong
According to the report, 23% of Gen Z and 17% of millennials are concerned about selecting the incorrect life insurance death benefit amount, compared to only 7% of baby boomers. One in ten Generation X Americans (10%) had the same fear.
Overall, young adults have reduced confidence in the purchasing experience. Nearly a third of baby boomers (32%) who have not purchased a policy say they are highly confident in their ability to choose the best coverage type for their needs, while 13% of Gen Z, 20% of millennials, and 15% of Gen X say the same.
Confidence levels may not always improve after purchasing a policy. Ally Kotwica, a 26-year-old marketing director in New Mexico, bought life insurance, but she wonders if the money could have been better spent.
“My husband and I got married in 2020, and my parents had always said when you get married, you should get life insurance,” she says. She believes she made a safe choice, but she is not certain it was the greatest decision.
Making important financial decisions can be scary. The trick is to educate yourself: research the various types of life insurance and compare prices from different providers. That way, you’ll be able to understand your alternatives and make the best decision possible when the time comes to buy.
Buyers usually select between two forms of coverage: term and permanent. Most families require only a term life insurance policy. It lasts for a specified amount of time, such as 10 or 20 years, and is typically less expensive than permanent coverage. Permanent policies, such as whole life insurance, cover your entire life and frequently include a cash value investment account that you can access while you are still living.
Concerns about qualifying for coverage
According to the report, 21% of Gen Z and 16% of millennials are anxious about not qualifying for coverage, compared to only 7% of baby boomers. Eleven percent of Generation X had the same fear. However, the younger and healthier you are, the more likely you are to qualify for affordable insurance.
When you apply for a policy, the insurer will normally assess your age and health to establish your life expectancy. The longer your life expectancy, the less risk you are to insure, resulting in reduced rates. According to Quotacy, an insurance brokerage service, the average annual premium for a $500,000, 20-year term life policy for a healthy 30-year-old applicant is $210. For comparison, the average annual premium for a healthy 50-year-old purchasing the same coverage is $744.
Do you need life insurance?
Purchasing life insurance can be a daunting task, especially if it’s your first time shopping for coverage and you’re not sure where to begin. In general, life insurance is required only if your death will place a financial burden on others.
If you die unexpectedly, life insurance can help pay the expenses of family members who rely on your income. It can also be used to repay obligations that others are liable for, such as a mortgage.
When evaluating if you need life insurance, consult with a fee-only financial counselor. These consultants are paid a flat fee, not a sales commission, so the advice they provide is unaffected by the type or amount of coverage you purchase.
