Financial Planning

Personal Finance Tip for Millenials: Consider Life Insurance

By the time most people reach their thirties, they’re beginning to pay more attention to their financial health. Unfortunately, for most, that financial health self-checkup doesn’t include any thoughts of life insurance – – It should!  We tend to think of life insurance in a morbid way because you might feel like you’re planning your death.  I get it! You’re young have no plans to go anywhere at the moment.

Here’s why you should consider life insurance, regardless of your age..

Think about a life insurance policy that pays the beneficiary say, half a million dollars upon your death.  You might be thinking about how they’ll be able to buy their dream house, and put their dream car in the garage.  Right after they take an epic vacation.  That’s not what life insurance should be used for.

Life insurance should be used to enable your beneficiaries (presumably your dependent family) to replace your income.  In the event of your death they can continue to have the lifestyle you worked so hard for them to have. So that half a million dollars, or whatever amount it happens to be, gets invested in a vehicle that earns enough to do that without immediately depleting the principal on frivolous purchases.

A life insurance policy can also help you while you’re still alive.
Permanent life insurance policies include a tax-advantaged investment component enabling you to have a separate death benefit, plus investment accounts that you can grow and use for a variety of things in your own life. Some even enable you to pay the monthly premium out of the investment earnings. One such insurance product is the VUL (Variable Universal Life) policy, but there are others that are similar.  While more expensive than term insurance, permanent life insurance can include many options that benefit the insured in life as well as beneficiaries in the event of death.

So, even if you don’t have a dependent family yet, life insurance is something you should strongly consider. Of course, everyone’s situation is different, so you’ll need to get some qualified professional advice on your specific insurance needs.

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