Should Gen Z Buy Life Insurance?

    First Time Buyer’s Guide: Buy Young, Save More

    Like many young millennials, members of Generation Z may not think they need life insurance. 

    However, buying a life plan early on can benefit young people in more ways than one. Specifically, insurance companies charge young applicants less across the board – even with minor health issues and a less-than-ideal BMI. Life insurance policies can also provide an added layer of security for folks that may be paying off their student debts, mortgage protection insurance, which can protect young adults looking to start their lives.

    Suffice to say, the benefits of buying a plan when you’re young greatly outweigh the (financial) costs. Read on to find out why members of Generation Z should consider getting insured.

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    Why Gen Z Should Consider Buying Life Insurance

    Insurance application activity has dropped since 2018 because more young Americans don’t think they need insurance. This is primarily because millennials and members of Generation Z don't have enough information, have no one to support yet, haven’t become parents, or are preoccupied with paying off their educational loans. 

    However, while it may seem counterintuitive at first, getting insured when you’re young and in debt is actually an excellent decision for your long-term finances. This next section outlines five primary reasons why young millennials and members of Generation Z should consider buying a plan. 

    Buy Young And Save More

    Life insurers can determine a person’s relative risk by requiring applicants to submit their health records, undergo routine blood and urine tests, report any prescription drug use, and supply other relevant information. Results from the routine exams help life insurance companies determine an applicant’s “mortality” or how “risky” they are to insure. 

    Given this, risk is important because it determines how much a person will end up paying on premiums. Gen Z and millennials generally get lower rates because insurers consider young people to be relatively “low-risk.” 

    Therefore, buyers in the age group of millennials and members of Generation Z can usually secure much lower rates on their life policies. Individuals that buy life insurance as early as their 20s pay less in premiums over the life of the policy.

    More Time For Your Policy To Grow

    Many millennials and Gen Z folks may not see the need for life insurance right now, but early life insurance applications can pay off in the years to come – especially if they purchase permanent policies. 

    When you buy a permanent policy early in life, its cash component has more time to grow. For example, a 21-year-old potential policy owner that buys a whole life plan has significantly more time to grow their cash value component than older millennials do. 

    That means when young millennials or members of Generation Z need a cash infusion to cover emergency costs, they can dip into their policy’s cash value without jeopardizing their financial plan. Some policies can even be an excellent source of retirement income later in life. 

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    Protect Your Loved Ones

    Many young Americans have a growing number of financial obligations. This includes loans that were co-signed by their parents, partners, or other family members. But whether it’s mortgage debt, student loans, car loans, or credit card bills, the loved ones you leave behind are usually legally obligated to cover the balance.

    Having an active life policy can soften the financial burden of unpaid debts. That means life insurance can cover all your needs, such as your student loan debt or unpaid medical and legal bills. 

    Prepare For Your Future Family

    Members of Gen Z may have plans of starting a family in the future. Responsible family planning means being ready for unexpected life changes that may financially impact your future children – for example, the death of you or their other parent. 

    Insurance policies are an excellent way to take action and secure your future dependents financially. The benefits provided by your insurer can be used in several ways. It can replace your income, pay off any outstanding debt, or even finance your child’s education in your absence.

    Policies Are Flexible

    A standard life insurance company will offer policy owners a wide variety of policy riders or add-on benefits during the application process. With that said, an additional life insurance benefit usually requires extra premium payments, but some riders come free of charge. 

    This modular approach to life plans helps address life insurance gaps. Potential policy owners can customize their benefits package to suit their current needs while still having enough flexibility to cover the “unknown”, like accidents and long-term care. 

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    Frequently Asked Questions

    What type of life insurance life insurance coverage should I get? 

    There is no one solution to everyone’s coverage needs, and the “best” plan usually depends on your specific circumstances. With that said, there are many kinds of policies available for purchase, but most fall under two categories: 

    • Term life insurance: Term life insurance options provide coverage usually for 10 to 30 years. This life insurance policy is cheaper than the whole life alternative but doesn't provide any additional coverage once they expire. These plans are best for applicants on a budget with temporary financial obligations like loans. 
    • Whole life insurance: Whole life plans provide policy owners with coverage for their entire lives as long as the premiums are kept up-to-date. This type of life insurance policy has a cash value, which is a savings component that accrues value over time. Policy owners may borrow against their savings component or use it as collateral for a loan. 

    How does life insurance work? 

    A typical insurance plan provides a payout called a death benefit in exchange for monthly payments or premiums. This benefit is then paid out to your designated beneficiaries when you pass away. Payments are usually made as a lump sum or in increments over a particular period of time. 

    Conclusion

    Buying an insurance policy is a must for anyone who wants to secure their assets, debts, loved ones, or future families. But why should this matter to the young people of Generation Z?

    Like millennials, the members of the young Generation Z have growing financial responsibilities. As they start new jobs, buy homes, and start families, the need for security grows. Young buyers, in particular, have a distinct edge over older applicants because insurers are more likely to grant them affordable rates. 

    However, first-time buyers may find the process complicated and overwhelming at times. That’s why we recommend connecting with a financial professional. Contact Wesley Insurance, LLC to find out how we can help you find the perfect plan for your future! 

    Written By Cameron McDowell
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