Financial Planning for Millennials
26th July 2016
When you're in your 30s, the furthest thing from your mind is probably the thought of your own demise. However, for a number of reasons that we're about to explore, buying life insurance while you are still young could help your family cope financially if the unthinkable were to happen.
Your Debts Don't Always Die with You
The good news is that in the UK, your next of kin would not automatically be responsible for your debts if you were to die. That being said, if you have taken out a joint loan or someone has provided a loan guarantee on your behalf, the surviving party usually becomes liable for the whole debt.
If you're a millennial with a degree, it's highly likely that you didn't have access to free university education and have racked up a considerable amount of student debt as a result. Outstanding student loans provided by the UK Government are usually written off after death. Private student loans secured using a guarantor, on the other hand, typically aren't, which will mean the co-signer for the loan is left to pick up the bill.
In either case, if you have life insurance and were to die, the beneficiaries you name in the policy can use the resulting payout to settle any debts you leave behind as well as any final expenses.
Funerals Are Expensive
Did you know that one in ten people struggle to pay for a funeral? Due to soaring costs, the average cost of a funeral in the UK has now reached nearly £4,000. If you want a headstone, reception and flowers, these extras bring the total average cost up to nearer £6,000.
Sadly, being young does not make you indestructible and, if the worst were to happen, it would be your family who were left to pay the costs of your funeral. Again, having a life insurance policy in your name will help reduce the funeral expenses for the family you leave behind, while ensuring you get the send-off you deserve.
I'm Fit & Healthy - Surely I Don't Need Life Insurance?
When you are young, you are far likelier to be medically fit. Unless you have a family history of illness, this means you will typically find it a lot easier to secure a life insurance policy. What's more, you are likely to find it a lot easier to include critical illness cover within your policy, which will pay a lump sum if you are later diagnosed with a medical condition.
Recent research suggests that, if the main breadwinner's income is lost, the average UK household can only survive for 18 days before running out of funds. For this reason, having critical illness cover in place offers a robust level of financial protection. So, if you were to become seriously ill, you would be able to concentrate on getting better, rather than having to race back to work to cover your mounting bills.
For more information about critical illness cover, click here.
Buy Now, Save Later
As your age increases in years, so will the cost of buying life insurance. An additional benefit of being young and illness-free is that insurance providers will deem you as low risk in terms of paying out on the life insurance you take out. Consequently, locking into a policy while you are young and in excellent shape will mean you pay lower monthly premiums for the entirety of its term.
What Type of Life Insurance Should You Buy as a Young Person?
The most common life cover purchased by young adults with no mortgage or dependents is level term life insurance. Essentially, level term life insurance is a policy that will pay out a fixed amount and lasts for a length of time of your choosing. And the younger and healthier you are when you purchase a policy of this type, the cheaper is it for the entire term - whether that's 10 years, 20 years, or more.
For more information about level term life insurance, click here.
Note: it's always worth looking into all the different types of life insurance that are available, as choosing the right one for you will depend on your individual circumstances.
If someone close to you is likely to be affected by your death financially, it is worth considering life insurance, regardless of your age. Plus, if you purchase life cover now, rather than later, you are far more likely to secure a cheaper policy for the cover you require rather than waiting until you're older.
At Compare Cover, we're dedicated to helping people protect their world for less. As a specialist online comparison service, we are committed to ensuring you can find the best possible life cover at the right price.
Using our life insurance comparison service is free, fast and incredibly easy. To quickly compare all your life insurance quotes in one simple search, click here now.