If you were born between 1981 and 1996 then you’re a millennial. It means that, statistically, you’re less likely to own a home than the generations before, you’re more likely to wait to get married, and you probably have student loans or other debts to pay.
It’s also likely to mean that you don’t have any life insurance in place. A recent report from insurer Legal & General surveyed 2,000 millennials to discover their attitudes to life insurance and concluded that millennials often misunderstood or overestimated the cost of insurance and didn’t realise the main benefits.
So, if you’re aged between 24 and 39, here are five reasons you should think about putting some life insurance in place.
1. You have a mortgage
According to the Legal & General research, more than a third (37%) of millennials have a mortgage, and almost half (45%) plan to get one in the next five years. This suggests that there are – and will be – increasing numbers of millennials with significant debt.
It’s also interesting to note that 37% of millennials with joint mortgages don’t have life insurance, and one in three of this group (36%) says that, if they were to die, their partner wouldn’t be able to afford the mortgage repayments on their own.
Your mortgage is likely to be the biggest financial commitment you ever make, and so you need to think about what would happen if you suddenly weren’t around anymore to pay it. Could your spouse or partner keep up the repayments? Would your children be able to remain in the family home?
If you have a capital and interest (repayment) mortgage, then simple decreasing term insurance (sometimes called ‘mortgage protection life insurance’) might be the answer. Here, the amount of cover decreases in line with your outstanding mortgage, so this is a cost-effective way of ensuring your mortgage could be repaid in the event of your death.
If you have an ‘interest only’ mortgage, then level term insurance – which pays a fixed amount of cover if you die within the term – may be more appropriate.
Either way, it’s worth thinking about making sure your loved ones aren’t left with a significant debt if something happens to you. And, you may be surprised at how little the right cover costs, which brings us to…
2. Life insurance is much cheaper than you think
How much does it cost to cover a 30-year-old non-smoker with a cash sum of £100,000 for 30 years?
If you guessed more than £20 per month, you’re not alone. Nine out of ten respondents to that question overestimated the cost, according to the Legal & General research. The median guess by millennials was £23 per month, which is just over three times more than it could actually cost a 30-year-old non-smoker to take out a 30-year level term life insurance policy with Legal & General.
As you can see from this table, the cost of cover could be significantly less than you think. For a younger millennial, the peace of mind that a significant lump sum could be available to your loved ones on your death costs less than a couple of cappuccinos each month.
It’s also worth considering that these figures apply to Legal & General only. At I’m Insured, we scour the market to find the cheapest cover for your needs. We work with dozens of the UK’s leading insurers to find the right cover at the right price, and we even take less than the standard commission so we can pass on the savings to you.
3. You have, or you plan to have, a child
The Legal & General study found that 41% of millennials had a child, and that 37% of those without a child expect to start a family in the next few years.
If you have – or you’re planning to have – a child, then it’s important to make sure that you can provide for them financially. This includes making sure they are supported even if you’re no longer around. If something happened to you:
- Would there be financial support in place to provide for your children? A October 2020 study by the Child Poverty Action Group revealed that the cost of raising a child until age 18 was £152,747 for a couple
- Would it be possible for your children to carry on living in the family home? Could the surviving parent afford to pay the mortgage, utility bills, and associated expenses?
- Would your children still be able to go to university or college, or buy a home of their own?
If you’re a parent, it’s important to think about putting some protection in place. Even if you’re not the main wage-earner, it’s vital to have cover to provide financial support if something should happen to you.
4. You might need the financial benefits
As a millennial, it’s likely that you will have first-hand experience of tragedy and loss. Almost eight in ten millennials have lost a loved one, roughly half have known a close acquaintance who passed away, and nearly one in five has lost a peer of a similar age who didn’t have life insurance.
If you’ve had experience of how the death of someone close to you can affect the people around them, you may understand why it’s just so important to make sure you have the right protection in place.
When asked if they believe that someone who is young and healthy should consider getting life insurance, 73% of millennials said ‘yes’.
5. It’s easier to understand than you think
As well as overestimating the cost of life insurance millennials also show low levels of understanding when it came to how life insurance works.
For example, around eight in ten millennials did not know how level term or decreasing term life insurance worked. 44% of millennials without life insurance said they didn’t realise it could be used to pay off a mortgage in the event of one’s death, while half (51%) of uninsured millennials said they had no idea what amount they should consider.
As life insurance experts, we can help you find the right cover and explain your choices to you. You can also use our handy online life insurance calculator to help you work out just how much cover might be appropriate.
We can help you find the right cover at the right price
As a millennial, it is likely life insurance is both cheaper and easier to understand than you think. And, considering one on five millennials is in a relationship, has at least one child, and has a mortgage, there are lots of compelling reasons to make sure you’re protected.
We work with dozens of the UK’s leading insurers to find you the cover you need at the best price. We can also help you if you have existing medical conditions, or you just need some straightforward, jargon-free information about the various options.
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