With the rising cost of living, surging inflation rates, and diminishing unemployment opportunities, it may seem as if the economic landscape is engineered to make millennials fail. But that’s not true.
There are millions of smart millennials who’ve achieved tremendous success despite the tough economic times. All it takes is making out-of-the-box investment decisions and fostering healthy money habits.
This article highlights the five ingenious ways on how millennials can save money on life insurance.
- Choose Your Type of Life Insurance
The most important tip on how to save money on life insurance for millennials is to start by picking the best life insurance type.
Note that there are two major categories of life insurance – permanent life insurance and term life insurance. Each option comes with its own benefits and drawbacks.
- Permanent Life Insurance
Permanent life insurance offers lifelong coverage provided that you diligently pay your premiums. It also allows you to build a significant cash value that grows tax-deferred.
On the flip side, permanent life insurance typically attracts higher premiums. This type of life insurance can also be a bit complicated since there are different policy categories to pick from.
- Whole Life Insurance
Whole life insurance offers lifelong coverage and a cash value feature. It’s usually the most expensive type of life insurance since the premiums and death benefits stay constant over time.
- Universal Life Insurance
Universal life insurance offers similar features as whole life insurance. The main difference is that the insured can adjust their premiums and death benefits.
- Guaranteed Issue Life Insurance
This type of permanent life insurance mainly targets senior citizens whose health conditions are deteriorating; hence, are seeking a policy to help cater for final expenses. Guaranteed issue life insurance isn’t an ideal choice for millennials due to the age requirements.
- Term Life Insurance
Term life insurance allows you to lock in a rate for the term period. This period is typically five, ten, fifteen, twenty, twenty-five, or thirty years.
One major feature of term life insurance is that your premiums stay level during the insured period. Your insurer then pays a death benefit if you die while the coverage is still in force.
Besides, term life insurance generally attracts lower quotes than permanent life insurance.
- Follow the 50-30-20 Rule
Millennials are known for their poor saving habits. Most members of this demographic would rather splurge on the finer things of life instead of setting something aside for a rainy day.
Fortunately, there are numerous tips to save money for your life insurance even if you’re on a lean paycheck. One such strategy is the 50-30-20 rule.
The 50-30-20 rule recommends setting aside 50% of your income towards financing your needs. Needs include expenses like rent, energy bills, food, and clothing.
30% should go toward wants. Wants are things that elevate your life beyond the status of mere survival, such as vacations. They’re a little less important than needs.
The remaining 20% should go toward savings for your future goals, one of which is life insurance.
Remember that the 50-30-20 rule doesn’t apply to everyone. However, it offers an overview on how any typical paycheck ought to be expended.
- Buy Insurance When You’re Young
Someone once quipped that buying life insurance is like paying for an umbrella when it’s sunny, so you can use it when the rainy season sets in.
Now, most people think of insurance more as an expenditure than an investment. This explains why many millennials do not prioritize purchasing life insurance in their youth.
However, it’s important to note that life insurance becomes more expensive as you age. That’s for the simple reason that old age comes with a higher susceptibility to health issues, which makes the insured risk (death) more likely to happen.
Buying life insurance when you’re younger allows you to enjoy more affordable premiums. You can then pay the same premium amount for the policy’s term.
There’s no standard age that millennials should purchase a life insurance policy. But the conventional wisdom is to do so as soon as you land your first job. The longer you wait, the costlier the premiums get.
Let’s assume a life insurance company imposes a $30 premium amount on a 20-year-old client. Comparatively, the same company may ask as much as $200 in premium for a 50-year-old seeking the same type of life insurance policy.
- Keep Your Eyes Out for Policy Discounts
There are dozens of life insurance service providers. Obviously, these companies differ in their offerings. That makes it necessary to compare quotes across various service providers.
Comparing life insurance quotes doesn’t necessarily require walking physically into a company’s head office. You could simply visit their online pages to sample their packages. You’ll always find an insurer that offers the most competitive premium rates and death benefits.
Just remember to compare similar quotes. That means a whole life insurance quote from company A against a whole life insurance quote from companies B, C, D, etc.
And when you finally hone in on the most affordable life insurance quote, don’t stop there. Proceed to inquire about any discounts you might qualify for.
Many life insurance companies offer discounts for clients that belong to specific organizations, such as the military and teachers. Others provide discounted rates for clients seeking to purchase life insurance alongside other insurance products.
You may also qualify for life insurance discounts if you pay your annual premium amount upfront.
- Maintain Good Health
Keeping your health in check is a proactive way of guarding against chronic diseases.
Chronic diseases can diminish your workplace productivity and put a strain on your finances. Besides, they could lead to your untimely death.
That’s precisely why maintaining good health is an excellent tip for saving money for your life insurance.
Maintaining proper health starts with mindful dieting. Always insist on eating a balanced diet, paying particular attention to the recommended daily values (RDVs) of the three main food groups – protein, carbohydrates, and lipids.
In the same breath, avoid foods known for their high disease risks. These include processed foods, refined carbohydrates, and saturated fats.
Other ways millennials can maintain proper health and save on life insurance money include;
- Exercising regularly
- Getting adequate sleep
- Dealing with stress
- Cutting back on alcohol and tobacco
- Weight watching
- Taking the required multivitamins
There are numerous ways millennials can save money on life insurance. Remember that the most important tip is to find the right life insurance type and then purchase the product as soon as possible. Then, follow the other money-saving tips to ensure you’re always up to date on your premium payments.