Like many millennials, the policy was not a priority for the
34-year-old from Cambridge, Massachusetts, until the twins were due.
He will start paying down close to $200,000 in student debt after
completing his MBA from the Massachusetts Institute of Technology's
Sloan School of Management.
A study from Life Happens, a consumer group formed by insurance
providers, and LIMRA, the life insurance trade association, found
that 29 percent of millennials cited saving for a vacation as a
priority over purchasing life insurance or increasing their
coverage. And 60 percent of millennials said it was more important
to pay for expenses like Internet access, cable, and cellphones than
purchase some or more life insurance.
"Young people think life insurance is something you need to think
about when you get old," said certified financial planner Shannah
Compton Game. "It's a conversation topic for their parents, not
them."
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But young people need life insurance policies too, especially if
they have children or do not have coverage through an employer. Even
a workplace plan, which typically covers $50,000 in income
replacement, may not be enough for a young person with a mortgage or
heavy private student loan debt which they could pass to spouses or
parents who co-signed for loans. Workplace insurance plans do not
transition with you, so millennials who change jobs a lot may come
in and out of coverage throughout their careers.
"The main reasons a young person needs life insurance are if they
are married or have a family. Life insurance provides income
replacement that can be valuable for young people who are just
starting out, or in the situation where one spouse makes more than
the other," said Compton Game.
REACHING OUT
The insurance industry is seeking new ways to appeal to younger
buyers who are not offered a life insurance policy through work, or
need extended coverage beyond a workplace plan because of risk
factors.
Focus on benefits rather than telling stories about death, said
Compton Game.
Most traditional life insurance policies require a medical
examination and meeting with a sales person, processes that do not
appeal to millennials used to making a transaction with a few clicks
on their smartphones.
Some insurers have come up with new ways to attract millennials.
In May, USAA added an option allowing young people to increase
coverage at key life events, such as having a child, without
additional underwriting.
Also in spring, MassMutual started a life insurance company called
Haven Life to target younger customers. To minimize the intimidation
factor, Haven Life offers immediate decisions on up to $1 million in
term coverage from top-rated carriers, and the underwriting process
occurs online.
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MISJUDGING PRICING
When Haven Life opened for business, Shonkwiler was among the first
customers. He had spent close to 50 days working with a traditional
life insurance company, and the mountains of paperwork and questions
were wearing him down.
As a young, healthy non-smoker, Shonkwiler was frustrated that the
coverage he wanted did not seem available. The online process at
Haven was much smoother and was completed in a week, he said. His
$500,000, 30-year term policy costs $25 a month.
That is less expensive than many people would think. In fact, 80
percent of all consumers misjudge the price for term life insurance,
which is purchased in blocks of time like 10 or 20 years and does
not yield a payout unless there is a qualifying event.
The survey by Life Happens and LIMRA found that millennials believed
a healthy 30-year-old would have to pay $600 a year for a 20-year
$250,000 policy. The annual rate is actually as low as$160, the
organizations said.
Myriad other insurance options are available besides term policies,
which offer more complicated investment opportunities and have
different pricing structures. But anyone considering those should
consult an independent financial adviser.
![](http://archives.lincolndailynews.com/2015/Oct/01/images/ads/current/bennett_lda_090314.png)
To do the math on what kind and how much insurance you need, you can
call individual insurance companies to compare, or get information
from companies like Life Happens and Bankrate.com, which have
easy-to-use calculators.
(Editing by Lauren Young and Beth Pinsker)
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