Do Millennials Need Life Insurance?

Millennials are defined as the generation that reached young adulthood in the early 21st century. The constant presence of the internet in every sphere of life, easy access to knowledge and information, and greater connect with global trends influences millennials' approach to their career choices and their finances.

In this blog, we will talk about millennials and life insurance and why they should invest in their future through life insurance policies.

What Is Life Insurance?

Life insurance is a contract between the insurance company and the policy owner. The insurance company gives a sum of money to the nominee or beneficiary in the event of the policyholder's demise when the policy is still active. The amount paid to the beneficiary by the insurance company depends on the type of life insurance policy bought by the policyholder. To enjoy the benefits of the financial help from the insurer, a policyholder has to pay a fixed amount as a premium towards the life insurance on a monthly, quarterly, half-yearly, or yearly basis.

Types Of Insurance

Insurance is an important tool that helps you enjoy a stress-free life by providing financial cover in case of any emergencies. Nowadays, you have a range of options to choose from if you are looking to get yourself insured. There is a wide variety of different types of insurance policies available in the market. Most insurances are optional but some are mandatory by the law.

Here is a list of some of the major insurance policies available in India:

1. Health Insurance
   Until the end of the 20th century, health insurance was not a very popular investment option. One of the key reasons could be that perhaps earlier a single life insurance policy was considered enough for dealing with emergencies in life. However, for millennials, rising healthcare expenses and worsening global health scenarios are major concerns, making health insurance an important tool to have in your financial portfolio.
   The number of people looking to buy health insurance has increased in the past few years. Since the Covid-19 pandemic struck, more and more people are realising the importance of buying a health insurance policy. It protects you from rising healthcare costs and ensures easy access to quality medical facilities. It covers the medical expenses incurred in case of hospitalisation due to an accident or illness. An insurance company can either reimburse the policyholder for expenses incurred for the treatment, or it can directly deal with the hospital to take care of the treatment expenses. Most insurance companies tie up with several hospitals which are termed network hospitals to provide the best health cover and ensure a smooth, cashless treatment for their health insurance policyholders.

2. Term life insurance
   Term insurance, in simple words, is a type of life insurance that provides financial coverage for a specific period to the policy owner. It is one of the most cost-effective and flexible forms of insurance coverage. In the unfortunate event of a policyholder's death, term insurance provides protection in the form of financial security to the family which helps them in meeting their financial requirements. It is primarily used as a form of life insurance for a fixed period which can range from 5 years to 40 years or till a person attains 99 years of age. But the additional riders that it comes along with, make it an attractive alternative. These riders can be added to your term insurance for a small additional cost to the existing premium.
   You must include term insurance as part of your financial portfolio because it can help your family in your absence or when your livelihood is affected because of a disability or a critical illness. It acts as the first line of defence in case of unfortunate events and ensures that your family does not have to compromise on their dreams.

3. ULIP Life insurance
   ULIP plans come with dual benefits of investment and insurance. It offers the best of both worlds which makes it a popular investment tool and a better option than investment or insurance alone. By buying ULIP you enjoy the benefits of the share market without taking heavy risks and get the safety net for your family in the form of life cover. It is one of the popular investment options available in the market if you are looking to grow your wealth and ensure the financial security of your loved ones when you are not around.

4. Retirement Insurance plans
   Every generation has a different viewpoint on life which influences the way they approach their finances. Similarly, retirement planning has witnessed a shift in the approach over the years. It can be seen from the asset classes in which people invest their savings. Earlier, different ways to plan for retirement meant investing in EPFs, gold, fixed deposits, etc. But with increasing inflation and a lack of good returns from traditional investment tools, people are looking to put their money in investment tools with higher returns to deal with the rising inflation and to grow their wealth.
   Pension Plan or Retirement Plan is a life insurance product for a safe and comfortable life after retirement When you retire from work, the flow of income stops but life and expenses do not, so it is necessary to plan ahead. A retirement insurance plan is an important part of a financial strategy that helps you lead a stress-free post-retirement life.

Do Millennials Need Life Insurance?

Millennials have seen fast-paced technological advancement as well as experienced the effects of economic recessions like no other generation before. Hence, their approach toward investment and savings is guided by these experiences. Making them financially smart to understand the importance of savings, yet knowing to spend enough to ensure that they do not lose out on the wonderful experiences that life has to offer.

While several millennials understand the importance of investing in different options to grow their wealth. They often tend to ignore the importance of investing in life insurance. Being prepared for uncertain times is the wisest investment you can make. When you are young and healthy, getting yourself insured might not seem an attractive idea. But the benefits of buying insurance when you are young are immense.

Life insurance is cheaper when you are young because you are considered low risk. This makes the insurance premiums affordable and you can buy comprehensive life insurance at a cheaper price if you do not have any pre-existing illness. Moreover, Insurance policies such as ULIP and endowment plans are great options for growing your wealth while ensuring protection for your family with a life cover.

Conclusion

An insurance policy is an important tool to have when dealing with unplanned expenses that can occur for a variety of reasons. The extent of financial coverage, duration of the insurance policy, and the claim settlement ratio are some of the key factors to be looked at when planning to finalise the insurance company. Secure your loved ones' financial future by buying life insurance with adequate cover and prepare your family for any emergencies in life.