studies have tagged millennials as risk-averse, so why
are they shunning life insurance?
percent of the under-40 generation has enough insurance
to cover all of their dependents’ needs in the event
of an early death, according to a new study.
many members of this generation are starting a family or
buying a home without access to replacement income if
the worst were to happen,” said Brian Madgett, vice
president of New York Life, the insurer that
commissioned the survey of 1,738 adults of all ages who
were married and/or had dependents and had annual
incomes of at least $50,000.
study, millennials reported having a median $100,000 in
life insurance coverage. The next-oldest generation,
Gen-Xers, had $272,000, and baby boomers had $190,000.
Then they were asked how that money would be used, from
replacing current income to covering retirement and
education costs. From those responses, the insurer
estimated how much would actually be required to cover
those costs. For millennials, that number was $452,000,
implying a shortfall of 78 percent. Gen-Xers would need
a median $525,000 and boomers, many of whom are now
retired, would need $110,000, according to the
be easy to dismiss the numbers as self-serving warnings
from a company that sells the product in question, but
it’s not a one-off. The industry as a whole reports
that the percentage of households with coverage has been
stagnant for more than a decade.
say life insurance is simply being squeezed out by other
priorities. Millennials are delaying families, so fewer
of them may feel the need to buy insurance, particularly
because high percentages of couples have dual incomes.
Across all generations, the struggle to save for
retirement and other pressing expenses cut into what can
be put aside for disaster planning. And longer life
expectancies mean more people are worried about
outliving their savings rather than planning for the
people are also just more skeptical about being sold
insurance products they don’t need,” said David
Flores Wilson, a New York financial adviser with
affluent millennial clients. “And they just have
vastly higher amounts of college debt (than previous
part, insurers are working on streamlining the
underwriting process and exploring new ways to make
their products appeal to a younger audience.
meantime, even the youngest savers should at least
contemplate how their current or future dependents would
be affected by a worst-case scenario.
insurance, typically a young worker’s best bet for
creating replacement income for loved ones in the event
of the worker’s premature death, remains relatively
38-year-old non-smoking man could secure a $500,000,
20-year term policy for around $300 a year, according to
the website term4sale.com.
same man would want to leave enough behind to replace
$50,000 in income for 20 years, he would need policies
that paid out a total of $772,000, assuming 3 percent
annual inflation and 6 percent in investment returns
over the period, the site estimates. Assuming today’s
rates, says term4sale, that would cost about $430 a