To Insure Or Not To Insure

Think you can’t afford life insurance? The truth is, if you’re married or partnered and relatively young, you can’t afford not to have it. If your household is barely managing on its current income, you might think there’s not enough money to pay insurance premiums. But flip that idea on its head for a moment: If you’re living paycheck to paycheck, what would happen to your family if they didn’t have your income? Or suppose it’s your spouse or partner who dies: Could you cover basic expenses on just one salary?

More than four in 10 people would feel a financial impact within six months if the household’s primary wage-earner died, according to the 2015 Insurance Barometer Study by nonprofit Life Happens and industry group LIMRA. Of those, 29% said they’d be in “financial trouble” just one month after such a loss. Particularly when you’re younger, life insurance can serve as a relatively inexpensive safety net. In fact, it may cost you less than 50 cents a day.

It’s smart to act now
Buying term life insurance when you’re young and healthy lets you lock in a low rate for decades — typically as long as 30 years. Term life insurance can be very cheap for people in their 20s and early 30s, but the longer you wait, the more coverage will cost.


That is, if you can even get it. Ryan Andrew, who owns an insurance agency in Richmond, Virginia, suggested that a friend buy coverage in his early 30s. His pal “didn’t believe in life insurance” until he got married and his wife became pregnant. Upon applying, the man found he’d developed a medical condition during the five years since he’d last visited a doctor.

Now, at 37, he is uninsurable. Andrew says that buying coverage while young means “insuring your insurability.” If illness or an accident were to happen later, you would have insurance until the end of the term.

But young people generally don’t view life insurance as a priority. According to the Insurance Barometer Study, 60% of millennials (people age 18 to 34 in 2015) believe that paying for Internet, cable or cell phone service is more important than buying life insurance, and 29% would rather save for vacation than pay premiums.   


It’s probably cheaper than you think
If you’re a millennial, it’s understandable if you worry about the cost of life insurance, particularly if you have student loans or other debts to think about. But chances are, life insurance is less expensive than you think. Eight out of 10 respondents in the Insurance Barometer Study overestimated the price of term life insurance.


Buy ‘when the coast is clear’
Agents say several other factors can keep younger people from seeking life insurance:

• Confusion. An estimated 19 million “stuck shoppers” are interested in life insurance but bewildered or frustrated by the process, according to a 2014 LIMRA study.  
• They already have it through their workplace. However, these are generally low-dollar-amount policies, usually no more than twice your annual salary — and the coverage disappears if you switch jobs or get laid off.
• The invincibility factor: Also known as “I’m young and healthy and everything’s going just fine.” But that’s the point of life insurance. When will you be healthier than you are today, and when will you be younger than you are today? Life insurance, if bought appropriately, is bought when the coast is clear,”.

Although housing costs, student loan repayment and retirement planning bite deeply into paychecks, life insurance costs only a few dollars a week. 

The bottom line

It’s human nature to want to believe in happily ever after, but it’s more realistic to assume otherwise. Applying for term life insurance while you’re young won’t cost much — as little as 38 to 43 cents per day — and will provide a safety net for your loved ones should the unthinkable happen.