This article was sponsored by SelectQuote, but all thoughts and opinions are my own. If you enjoyed it, give it a share with the hashtag #SQinsurance!
Millennials are proving to be a unique generation dealing with personal finances. Despite our YOLO reputation, Millennials are proving to be bigger savers and 401(k) investors than our Generation X predecessors, but it is easy to forget about life insurance. Life insurance is a key part of personal finance, and Millennials are in the best position to take advantage.
What is Term Life Insurance?
Term life insurance is a type of insurance that pays a benefit to a designated person (or people) in the event of your death. I know dying isn’t a fun, cheery topic to discuss, but let’s get real for a few minutes. Death happens.
Term life insurance is typically the least expensive life insurance available. Comparing to whole life, term life has much smaller monthly payments, but it also works differently.
With term life insurance, you make a fixed monthly payment every month for the term of the policy. If you pass away during that term, whether one month after signing up or 29 years later, the entire policy value pays out to the designated beneficiary.
I have a $1 million term life policy that pays out to my wife in the event that I were to pass away. I pay about $75 per month for my 30-year term life policy, which I signed up for a few years ago.
Finding the Best Rates
The monthly rate you pay for a term life insurance policy is based on the risk you will die during the term of the policy. These are the biggest factors that go into your rate:
- Your age – the younger you are, the cheaper your policy
- Your health – higher risk individuals pay a higher premium.
- Your lifestyle – people who do “high risk” activities like skydiving and rock climbing pay a little more than people who stick to more boring activities.
- Policy term – longer policy terms increase the risk of death during the term. For example, a 20-year term life insurance policy costs less per month than a 30-year term.
- The insurer – Each insurance company is trying to make money, and the rates vary between insurers.
Most of the variables are completely in your control! Signing up for a policy without waiting, even if you don’t have a family right now, saves you money. Staying healthy and doing things like keeping your blood pressure and cholesterol under control save you money. Lifestyle choices can save you money. And, you’re better off if you are healthier for a lot of other reasons too!
You can’t control what the insurance companies charge, but you can choose your insurance company. That’s where SelectQuote comes in.
SelectQuote is an insurance search engine that allows you to view rate quotes from a handful of insurers with only one simple form. Once you’ve picked the insurance company you like best – there is a little more to it than just the rate – you will fill out a more detailed application with that specific insurer.
Putting it more succinctly, SelectQuote shops around for your life insurance saving you time and money. It’s a big win for you!
Term Life Insurance Signup
Signing up for life insurance is a little more complicated than ordering something on Amazon, but it isn’t as bad as many people think.
When reviewing insurers at SelectQuote, look for both rate and financial stability ratings. Financial stability ratings are done by a 3rd party to assess the company’s ability to pay claims for the long-term future.
When you are choosing an insurer and looking at quotes, you will be asked to assess yourself for a medical underwriting class. These are typically broken down into buckets called Preferred Plus and Preferred for the healthiest individuals, and most younger applicants will fall under one of those categories.
Once you’ve found a low cost, stable insurance company, choose your insurer and fill out the full application. The application asks for standard information like name, address, birthdate, and phone number and a detailed medical history. Be completely honest when filling out your forms. Lying on an insurance document is insurance fraud and very, very against the law.
After submitting your full application, the insurer will reach out to you to schedule a short life insurance medical exam. These exams take about 30 minutes, and include a review of your medical history, a urine test, and a blood test. If you are healthy and not on drugs, this is nothing to worry about. This exam is at no cost to you, and they will usually send a nurse to your home or workplace to make it as convenient as possible for your schedule. I had mine at home on a Sunday morning.
After completing your medical exam, the insurer will send you a final insurance rate offer for you to accept and sign. The rate may not match the quote exactly depending on your medical exam and health history results.
Protect Your (Future) Family
If your life insurance only pays out if you die, it doesn’t benefit you at all, right? Wrong! It benefits you by knowing that in the event of a worst case scenario, the people you love and care for will be financially secure for years to come.
As the father of a beautiful ten-month old baby girl and husband of a wonderful woman, I want to make sure that my family is safe even if I’m not around. My $1 million life insurance policy will go a long way in protecting their financial interest.
Even if you don’t have a family yet, it is worth considering signing up for a term life insurance. Policies can be cheap when you’re young and go up dramatically as your age increases. My 26 year old sister just got a $35 per month quote, while I signed up closer to 30 and pay about double that every month. Saving a few years of payments doesn’t make up the difference.
Signing up as soon as possible will save you money. You’re not getting any younger, and likely you are not getting any healthier either. When it comes to term life insurance the sooner, the better. So what are you waiting for?
Get the FREE Personal Profitability Playbook
Earn more, spend thoughtfully, grow your wealth, and live a better life through mindful personal finance.