November 05, 2021

Financial Fundamentals Series: The Value of Life Insurance as a Millennial

Dana Edwards, CFP®, CSRIC®, EA
A good permanent life insurance policy is one of the best investments you can make. Starting when you are young makes a huge difference.

To my fellow millennials, with love:

If you’re still with me after reading the complete title of this blog post rather than seeing the words “life insurance” and getting back to trimming your beard or drinking your vegan bacon shake, congrats! Your ability to be humble and curious, your openness to learning, has given you a great advantage over all your comrades. (Of course, us millennials know that we’re so much better than all of them :)

Five Reasons You Should Get Life Insurance Now:

  1. The younger you are, the less expensive it is.

    Life insurance is a retirement vehicle that offers you and your family (or the one that you will have eventually, if you could put that cell phone down) an incredible amount of protection, and the younger you get it, the cheaper it is. Why? Because you’re healthy bro, despite all that bacon you eat.
  2. Better opportunity for favored ratings.

    I’ll spare you the details on that because I know your attention is waning, but in short, favored ratings means a cheaper premium for the life of the policy. In short, less money paid out for life insurance = more money for craft gluten-free IPAs.
  3. Structured policies to help the self-employed.

    Of course, you’re going to be self-employed your whole life. You’re building an app that tells folks where the nearest bacon festival is, and you’ve got venture capitalists choking on your bicycle dust. So, you’ll never need an employer. Eventually, your bacon app has expanded and includes beards and brews, and life is great. You had to take some business loans on the way and all that good living costs some money, so some credit debt too. What about paying all that off? I know, I’ll get there someday. But, just for fun (hahahaha!), let’s pretend that you don’t. And then, you die (ouch! Sorry bout that). The Man is gonna come around for his money. Are you going to leave that all up to your sweet mom who took care of you all those years? No! You’re going to think ahead and get life insurance so that there is some cash stored away so that your mom can keep all those dirty-money-grubbin’ old guys away...and pay them their money because, literally (as in literally), you do owe it to them.
  4. The ability to grow cash in tax-deferred environment over long periods.

    Ok. I know its decades from now, but even you are going to get old someday. And chances are, since you’re a millennial, you’re going to live to be very old. Which is fine because nothing bad will ever happen and you’re going to be able to retire when you’re 30 (thanks, Bacon-F-app!). But let’s think about that - if you retire when you’re 30 and you’re going to live to be 120 and you want to be living good (maybe even move out of your parents place), you’re going to need money. Life insurance that doesn’t cost you much (see #1 and #2) is a vehicle that allows you to grow cash tax-deferred for decades. That means it’s growing tax-free. That means, you’re beholden to no one...NO ONE! Except yourself, and that’s all who matters anyway.
  5. Acceleration Benefits for illnesses

    This one is going to be a bit rough. I get it. Us millennials, we don’t like thinking about getting sick (especially since we never do because we eat nothing but Raman) or injured (because we bike to work NO MATTER WHAT!). We don’t ever want to think about not being able to take care of ourselves. However, just entertain this for a moment - there is a chance that one day, you may not be able to. Yes, there are a myriad of ways that this would seriously not be cool, but life insurance can help avoid some of those with accelerated benefits. If you were to find yourself unable to do two of the six daily functions of living (bathing, dressing, self-feeding, toileting, grooming, and transferring), you could utilize the accelerated benefits to ease the financial burden on yourself and family.

Wow, you’re still here!?! In short, get life insurance. It will help you (most important), the other folks in your life (who?), and you’ll have lots of big phrases to use at the bike-commuter-electric-dance-beer-bacon-crawl on Tuesday night.