Helping Millennial families meet their financial needs.

AMONG THE MOST rapidly growing markets for life insurance today are Generation X and Generation Y. Generation X (or “Gen X”) includes those born between 1965 and 1980, while the larger Generation Y (aka “Millennials”) comprises those born between 1981 and 1995.  Both markets present unique challenges and opportunities for our Association.

According to the Life Insurance Marketing Research Administration (LIMRA), Generation Y is potentially a much larger market than the Baby Boomers (those born between 1946 and 1964), with an estimated $7.1 trillion in unfunded needs. These Millennials, with a population of over 85 million, are expected to out-earn Boomers over the next decade by $500 billion with total earnings of $3.5 trillion! As they become established in their careers and form families, they are beginning to plan and consider life insurance.

For Millennials, convenience, easily accessible information and online interaction will be key factors in their insurance-buying decisions. For example, a recent study found that Millennials are generally not very knowledgeable about the different types, availability or cost of life insurance nor about how much they may need. Most believe it is too expensive for them and only necessary if they have a family, work a high-risk job or are sick or old.

Use of social media and interactive advertising through the internet and video conferencing will become more prevalent as these younger generations begin purchasing insurance products, as will the ability of insurers to customize solutions based on lifestyle habits and online data capture. More than 500 million people now use cell phones and tablets, so agents need to communicate with younger clients via mobile devices.

Most of today’s Millennials don’t spend too much time thinking about something as dull as life insurance. They have other things to be concerned with, right? Isn’t life insurance something you worry about in the distant future? Maybe. Much depends on your individual situation. There’s not a one-size-fits-all approach to life insurance when it comes to Millennials, but understand that, yes, you may need life insurance.

For instance, does someone rely on you for financial support? Or, are you part of a dual-income family? If you answered “yes” to either question, you should consider purchasing life insurance.

If you were to die tomorrow, would your family be able to pay the bills without your income? Or, would you be able to pay the bills should something happen to your spouse or partner? If you answered “no” to either of those questions, you should consider purchasing life insurance.

Even if you believe you or your partner could financially cover all your household expenses — including joint debts such as a mortgage, auto loans and credit cards — what about your children and dependents? Remember, if you are part of a dual-income household that cares for children, your partner will lose a lot more than just your income if you were to die prematurely. Consider all that both of you do to help care for the dependents in your home, then add up the cost of hiring a nanny (or day care) if you or your partner had to do it alone. Life insurance covers more than just a missing income; it can provide the financial resources needed for the surviving partner, parent or spouse to hire the help they need for ongoing care.

So, what type of insurance do Millennials really need? As we said earlier, that depends.

For most young people, term insurance might be all you need to get started. Term insurance is just what it sounds like – it covers you for a specific “term” or number of years, typically between 10 and 30 years. After the term period ends, your coverage ends as well. Term typically costs less than other types of coverage you can purchase. You only need the coverage so long as you have financial obligations, so, typically, 20 to 30 years should suffice. William Penn Association has a variety of term insurance options that can fit your needs and budget.

What about whole life insurance? With whole life insurance, the coverage is permanent and lasts throughout your entire life. The cost of whole life is typically higher than for the same amount of term, but it will be whole life insurance that you need most as you approach old age. Purchasing whole life insurance at the youngest age possible ensures that the coverage will be there when you need it most – at the time of your passing. Purchasing whole life at the youngest age possible also locks in the lowest rate possible, since rates typically increase with age.

For Millennials, we often recommend a combination of whole life and term insurance in order to cover both short-term and long-term needs. William Penn Association has some of the lowest cost coverage available on the market today. With a variety of payment options, we’re sure to have the right policy to fit your needs and budget.

Some of you may already have life insurance coverage through your employer, and thus think you don’t need to purchase additional coverage. Such coverage is a nice benefit, but there are a couple of reasons why you shouldn’t rely solely on the life insurance provided by your employer.

For one, the insurance might not be appropriate for your situation.

Plus, what if you change jobs and your new employer doesn’t offer coverage? It’s highly unlikely that you’ll be at that particular job forever. Statistics show that Millennials should plan on five to seven job changes in their lifetime. I was “downsized” from my last position at the age of 57, and, fortunately for me, I didn’t rely on my group insurance as my only coverage. Otherwise, I would have been scrambling to purchase new coverage at an advanced age.

Also, what if you are self-employed or work in a family-owned business? (More on this topic in the next issue).

Are you or a family member a Millennial? Are you confused about life insurance and aren’t sure what type of coverage is right for you? Confused about what it will cost and how to get started? Call your WPA agent today. Our agents are well trained and can custom design a plan that’s right for you. Don’t have an agent? Call the Home Office today, and we’ll have one assigned to you.