When the words “life insurance” come up, I’d bet money that a good amount of folks think of that scene in The Incredibles, where Mr. Incredible yeets his boss through a series of office walls. We’ll be the first to admit; it’s not the most flattering scene for the insurance industry.
There’s also a chance you may think of life insurance as a “nice-to-have" kind of thing you get when you reach a certain stage of adult life. Sort of like a mortgage or a family. Signs of being a "real’ adult, right?
At Wysh, we believe that life insurance isn’t just something you get as part of the adult package plan. It’s an important part of planning for your financial future. Many millennials possess some form of debt, mostly student loan debt. As the generation gets older, millennials are going to have more of these far-reaching financial conversations with themselves and with their families.
Some people think that life insurance is basically, you live, you die, your family gets a payout. Others may see insurance as a luxury, something that others may be able to have but you’re not quite there yet.
In reality, life insurance is more like a contract between a policyholder and an insurer. At a high level, this contract stipulates that the insurer will provide a sum of money to their beneficiaries should the policyholder die during their contract period. The sum of money will be paid out in exchange for premiums paid by the policyholder over the course of their life. In short, life insurance is about having peace of mind.
It is not, however, a will, which is a different document. If you’re curious as to how these two items compare to one another, you can check out this link here.
Now, there are two main types of life insurance: term life and whole life.
Term life insurance is a type of policy that lasts for a certain amount of years, otherwise known as a term. Assuming no unusual circumstances, if you, as an active policyholder, pass away during this term, the insurer would pay your beneficiaries as part of that contract. If you live past the end of the term, you can sometimes choose to renew for another term or switch to permanent coverage.
Term life policies are typically issued in periods of 10, 20, or even 30 years. Some insurers (*cough*) Wysh (*cough*), even allow for more tailored terms. As a policyholder, you can choose which term works best for you, your plans, and your family.
Whole life insurance is, as one writer put it, the OG life insurance. Unlike term life, whole life covers you for, well, life. You’re covered as soon as you’re approved for a plan until you pass away (assuming your premiums are being paid, of course). This type of life insurance is also referred to as cash value life insurance, because the money you put in grows over time. If you’re curious about whole life insurance and want to know more, you can check out our go-to guide to whole life insurance.
A recent study by Greenwald Research showed that seven in 10 millennials want insurance and various investment options. However, only about a quarter of millennials have money set aside for savings or emergencies. Life insurance, like other forms of insurance, is an important part of having financial protection.
According to the Education Data Initiative, GenXers have the greatest overall debt, but millennials have the highest student loan debt of any generation, at 14.8 million people in the US. If your parents co-signed your student loans, they’ll have to commit to paying that off in the event of your death. Having a life insurance policy could meet that challenge head on, as well as any number of other things. From mortgages, to credit card debt, to funeral costs and child care, having a life insurance policy can go a long way to providing peace of mind for you and your family.
How to get a policy: Once you’ve decided that life insurance is right for you, you still need to have some idea of how the whole process works.
Life insurance can seem like a lot of things. It can be scary and seen as dull ( à la The Incredibles), but at Wysh we believe that life insurance is just a part of the decision-making process as we all get older. What will happen to me in the unfortunate event of my death? What will happen to my family? Addressing these questions can be upsetting. But they can also give us the tools we need to prepare and be prepared.