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    Life Insurance Across the Generational Divide

    Life insurance should be a part of everyone's financial plan. Whether you are a young millennial starting your career and family, or a baby boomer making plans for retirement and taking care of your legacy, life insurance offers peace of mind and protection for your loved ones.

    But not every generation has the same priorities when it comes to purchasing life insurance, and there is a significant gap between the need for life insurance and the rates of coverage. In this blog post, we’ll take a deep dive into LIMRA’s 2018 Insurance Barometer Study and investigate the barriers that affect purchasing habits around life insurance for the baby boomer (1946-1964), Gen X (1965-1980), and millennial (1981-1998) populations.

    Barrier 1: Not enough information

    While every generation reports some level of confusion around what kind of life insurance coverage they should get, whether or not they would qualify for coverage, and how to access the services of a life insurance professional, millennials are particularly susceptible to these barriers to purchasing policies.

    According to the study, a full 58% of millennials do not know what type or how much life insurance coverage they should purchase. This is compared to 39% of Gen Xers and 29% of baby boomers, respectively.

    For the millennial generation, there are several options to choose from when it comes to life insurance. Term life policies are ideal for the millennial consumer because the premiums are predictable and are very affordable. As the name suggests, the policies are typically offered in terms and are available for 10-, 20-, or 30-year periods, but there are some carriers that also issue other level term periods.

    Thirty eight percent of millennials also believe that they would not qualify for coverage, while 19% of Gen Xers and 18% of baby boomers share this concern. Forty three percent of millennials also report never having been approached by a financial professional about life insurance (compared to 19% of Gen Xers and 12% of baby boomers).

    These numbers indicate that millennials are lacking the necessary information and guidance that they need to make an informed decision about purchasing life insurance. If you're a millennial and you need guidance to make an informed decision about purchasing life insurance, do your research online, speak to friends and family, and then, reach out to a financial professional who can answer your questions, provide further answers and then walk you through the acquisition process.

    Barrier 2: Misconceptions about who needs life insurance

    One of the biggest misconceptions about life insurance is that it’s only a suitable solution for someone that may leave behind a spouse and/or children after they pass away. While life insurance is typically something that people start to seriously think about when they get married or become parents, single people can also reap the benefits of having a policy.

    The younger you are, the more you can benefit from lower premiums. Statistically speaking, young people are further away from death. As such, insurance companies typically consider younger individuals a lower risk and in turn, the premiums are lower than those individuals closer to the expected mortality age (i.e. older). Likewise, if you opt for a whole life insurance policy, you'll have the opportunity to lock in a reduced life insurance rate and keep it over time as well as build up cash value which you may access in the future.

    Related Reading: Millennials: Why Purchasing Disability and Life Insurance Is a Smart Move

    Barrier 3: Too expensive

    Baby boomers are retiring and making plans for their legacy, while many millennials are more concerned about paying back student loans and making plans for buying their first home. Priorities around savings goals and living expenses vary widely across the generational divide.

    Of all the generations, baby boomers have the lowest barrier to purchasing life insurance. Gen Xers tend to focus their financial priorities on debt management, so extra money that they have which might otherwise go to life insurance is spent on paying down credit cards and other debts. According to the study, millennials are more likely than older generations to prioritize savings, college debt, and vacations over purchasing life insurance.

    With all the other financial burdens on their minds, many millennials feel like life insurance is too expensive for them to comfortably afford. In truth, many of the average millennial’s discretionary expenses actually cost more than a standard term life policy for a healthy individual. On average, a healthy, 30-year-old male can get a 20-year, $250,000 term life policy for approximately $160 a year, or about $13 a month.

    Regardless of whether you’re a millennial, Gen Xer, or baby boomer, the fact remains that death is inevitable. That poses a good reason to ensure that your dependents—whether existent now or a future consideration—are taken care of with a life insurance policy that you started years before, when it was inexpensive.

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    Joan Cleveland

    Joan Cleveland, CLU, ChFC, REBC leads SWBC Life Insurance Company as President and CEO. With more than 30 years of experience in the life insurance industry. She holds her Agent licenses for Life, Accident, Health Insurance, and has multiple FINRA securities Licenses. Joan is a frequent industry speaker and media spokesperson. She is a member of the Board of Directors of the American Bankers Insurance Association, and co-chair for their Government Relations Committee. In addition she is chair of LIMRA’s Strategic Marketing Issues Committee.

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