Life Insurance Advice for Millennial Women by Women

43 percent.

That's the percentage of women without life insurance coverage.

Life insurance is an important way to protect your family's finances. Millennial women are in their twenties and thirties, so they have some unique concerns and challenges to take into account when purchasing life insurance.

Like other Millennials, Millennial women are dealing with high amounts of student debt. Younger Millennials may just be starting their careers. Older Millennial women may have mortgages or even families to care for.

Because women in their twenties and thirties are at different points in their lives, they sometimes have different circumstances to consider. However, considering your current life situation and balancing it with future plans will help you identify what kind of life insurance works best and how much coverage you need.

If you're a Millennial woman, here are answers to the following six questions you might have about buying life insurance with answers from finance experts:

• What kind of life insurance policy is best for Millennials?
• What questions should I ask when buying life insurance?
• When is the best time to buy life insurance?
• Are there cases when it's best not to buy life insurance?
• What should I know about the underwriting process?
• Any other advice?

What kind of life insurance is best for Millennials?

There are three main kinds of life insurance: term, whole, and universal. Within each category, there are variations. Final expense insurance, for example, is a kind of whole life insurance. Universal life insurance policies can also be indexed universal or variable universal policies.

“Millennial women have many choices in the marketplace, and what they select should be driven by the amount and type of coverage needed based on their personal situation, how long they anticipate holding the policy, and the premium amount they would like to pay," says Jan Dubauskas Vice President at HIIQ, the parent company of Agilelifeinsurance.com.

As you evaluate your life insurance options, keep what you need at the forefront.

Lorena Tomasini, owner of MALM Life and Health Insurance Agency, offers a few examples:

• “Each case is different and this isn't a one-size fits all. It really depends on what you are looking to protect with the life insurance. If it's a temporary large asset, such as a mortgage, then a term policy would work.
• In other instances, maybe you’re a business owner and need protection in case something happens to you or your business partner. Then a permanent policy would be better because it builds cash value that can be used at any time. A permanent plan can also be used to supplement retirement incomes, in case of an emergency, to pay off a mortgage sooner or realistically for anything you need the money for.”

Some employers offer life insurance as part of their employee benefits packages. Taking advantage of this is a great way to get life insurance coverage at low premium rates.

However, employer-provided insurance offers coverage only while you have the job. For your peace of mind, consider purchasing your own life insurance policy.

“I often recommend a small whole life or universal life insurance policy. You want a policy that is going to stick with you, no matter what job you have, where you move or how long you live. These types of policies offer the flexibility that a millennial woman needs. With so many moving parts in their lives, they want something that can move with them,” says Tiffany Welka, financial advisor and accredited wealth management advisor at VFG Associates.

While a permanent life insurance policy will last a lifetime as long as you consistently pay the premiums, premium rates tend to be much higher for permanent policies than term policies.

If you’re just starting out on your own, it may make more sense to purchase a term life policy depending on your situation.

“Typically, it's recommended that those getting a life insurance policy start off with term life insurance. Often, those who choose permanent life insurance surrender it after 10 years or so because they can't keep up with the payments,” suggests Jacqueline Devereux, finance blogger for SproutCents.

It would be nice if there were a simple answer, but finding the kind of life insurance policy that will best meet your needs will help ensure that you have the coverage you need.

What questions should millennial women be asking when deciding to buy life insurance?

As you consider buying life insurance, it’s important to ask yourself questions about your personal needs and your policy options and features. Here are questions that experts identified as ones you should ask:

Personal needs

Understanding your coverage needs by evaluating your financial situation, including debt, savings, and dependents.

Weigh current and future needs

Welka answers this question: “How much life insurance do you need now? Oftentimes, people are not sure what they are trying to use life insurance for. Is it to cover a debt? Is it to pass along to beneficiaries? Knowing these numbers will allow the professional to assist you in figuring out how much insurance is needed now.

How much life insurance may you need in the future? Do you plan on starting a family someday? Purchasing a home? These are questions to consider when figuring out how much you may need in insurance at a later date. Many times, the younger and healthier you are, the less expensive the premium payments will be. Anticipating your future needs and paying for them based on your age now could save you money versus purchasing that amount of insurance at a later date.”

Think about assets and dependents

Dubauskas advises, "Millennial women should consider: what assets they are protecting? Do they have any children who would benefit from life insurance? Do they have any outstanding debt? Does the family have sufficient ready-cash for burial services? The answers to these questions will help shape how much life insurance is needed.”

Learn about your debt

Stephanie Bousley, personal finance author and consultant adds “Before you start paying for life insurance, first research the death policies around existing debt in your state. In some cases, it makes more sense to change some of the policies around your existing debt than to pay for life insurance. The specific pieces of information you need are

• Are there ANY co-signers on any of your loans? If so, see how you can get them taken off.
• Do you live in a state with community property laws, that require a surviving spouse to be responsible for any debts incurred during the marriage?
• If so, were any of your debts incurred during the marriage?

What are the death policies around any extra debt? Generally, authorized users on credit card accounts are NOT responsible for the other account holder's credit card debt if that person dies. Auto loans are treated similarly, though the loan company does have the right to repossess the car if payments can't be made.

Will your student loans be canceled if you die? Government loans are not necessarily, but if you refinance to a private loan company they usually will be. Obviously someone needs to read the fine print.

When you die, your assets become your estate. The process of eliminating outstanding debts and distributing any remaining funds is called probate. During probate (which is usually a set amount of time, 1–3 years) credit card companies and other creditors can come after the estate to collect debt, but they are less likely to be able to collect from family members (aside from states with community property laws with married couples).

Once you've educated yourself on EXACTLY what your family would be responsible for in the case of your death, re-evaluate the need to pay for life insurance. If your partner is gainfully employed, your debts won't be passed on to your family, you have no children, and no one is concerned about funeral costs, your money is probably better spent on debt payoff or retirement planning. If you have debt that other people would definitely be responsible after your death, life insurance is probably a good idea.”

Determining needs by evaluating your finances and life goals will help make sure you buy the right amount of coverage.

Policy options and features

Once you have a sense of how much life insurance coverage you’ll want to buy based on your needs, the next step is to evaluate your life insurance policy options and available features or riders.

Enrolling in workplace benefits

Bousley says, “First and foremost, find out if your workplace offers any life insurance plan (either for free, as a result of being employed by the company or for a nominal rate). If there's a free option, definitely enroll if you haven't been auto-enrolled already."

Buying your own

“What type of life insurance is best for you? There is whole life, term life, variable life, universal life and indexed universal life. Understanding what each of the options are is going to allow you to choose the best policy for your needs" shares Welka.

She adds, "Are there riders you can add to the policy to enhance it? A rider is something that is added to the policy — for instance, you may say if you have any future children, you want to them to be covered for life insurance with a death benefit of $5,000.00. Or, you may say if you become disabled, you want to make sure that you don’t have to pay your premium on life insurance policy because you won’t be able to work.”

Exploring your policy and rider options will help you figure out the best fit for your situation.

When is the best time to buy life insurance?

Adulting is an adjustment. Buying life insurance can be overlooked as part of becoming an adult. And, since the life insurance death benefit is mostly for your family’s financial security because it can be used to pay funeral costs, lingering debt, and even in some cases supplement income for your dependents, the value of a life insurance policy is not always evident to women without dependents.

“The best time would be when they are financially responsible, not just for someone else but also their own selves. Many women think of getting life insurance when they get married or have children. However, many should be looking at getting coverage before as a way of income protection, if something were to happen to them. What I mean by income protection is not just if they pass away, but now they can get policies with accelerated benefits in case of a critical illness or chronic illness,” advises Tomasini.

Some life insurance policies have terms that allow the policyholder to receive part of the death benefit in advance under specific circumstances. Being able to pay medical bills and take care of yourself is an important part of being responsible, self-reliant, and independent.

As you think about the timing of your life insurance purchase, consider how premium rates change based on health and age.

"Life insurance typically increases in cost with age and some life insurance requires the person to pass underwriting to determine overall health to receive the policy. Because age and health are important factors in life insurance, the best time for millennial women to buy life insurance is as soon as possible,” recommends Dubauskas.

In addition to locking in a lower premium, buying life insurance sooner rather than later has an additional advantage for permanent policies.

“Most whole and universal life policies have a cash value associated with them, so they could be building up a savings that you could use while you’re still alive. These cash accounts usually grow at a fixed interest rate much higher than the interest rate that you would receive at a bank,” says Welka.

Are there cases when it’s best not to buy life insurance?

Most often it’s better to have life insurance coverage than to not have it. However, there are some circumstances when having your own life insurance policy may not be a pressing need.

Tomasini identifies two potential situations:

• “If your spouse has you added as spouse rider. I always say people should each have their own policy though, as there are many downfalls to those spouse riders.
• If you have coverage through your job, that's okay, but that's usually not enough coverage, and you can't always take that with you if you change jobs.”

While there are some cases where getting your own life insurance policy may not be a big priority, it’s usually best to make sure that you have the coverage you need.

“We purchase home owners insurance for our homes, auto insurance for our vehicles, health insurance for ourselves in case we get sick — we even buy insurance for our phones. We all know one thing — we are going to pass away someday. Why wouldn’t you want to purchase insurance on your life? Our lives are much more valuable than a home, car or phone. Insuring your life is important for everyone,” says Welka.

However, adding a life insurance monthly premium to your budget may be tricky.

"Life insurance is very flexible and if a millennial woman doesn’t have a lot of income for life insurance, a smaller face value term life policy ($10,000 or $25,000) that costs less than $30 per month might be the best solution,” suggests Dubauskas.

What should millennial women know about the life insurance underwriting process?

Buying life insurance is a little more involved than picking a product and buying it. Before you can buy it, you have to apply and be approved. Part of the approval process includes a review of your medical history and current health called medical underwriting. Underwriting is how the insurance company evaluates the risk of insuring the applicant and what the premium rates will be.

"Underwriting can range from very simple to very complex, with simple being for lower amounts of life insurance and complex underwriting being for high amounts of life insurance. The most simple form of underwriting is called ‘guaranteed issue’ and that means that no matter your health condition, you will be issued health insurance. The most complex form of underwriting is called ‘fully underwritten’ and that will include a comprehensive review of medical records, pharmacy records, as well as a medical exam by a doctor,” says Dubauskas.

The underwriting you’ll undergo will depend on the kind of policy you choose and requirements the insurer has for underwriting that policy. Some insurance companies also have accelerated underwriting.

“With accelerated underwriting processes much of it is done automatically. People can now qualify for policies without a medical exam for large amounts of up to $1,000,000 (term or permanent coverage) and still get the preferred ratings and get approved in days, sometimes even instantly. If it's more than that amount ($1,000,000) then, yes, they would need to do a physical exam which is covered by the company and done at their home or office. With a fully underwritten (medical exam), it usually takes about a week after the exam to get an offer from the company as long as there is nothing else pending,” says Tomasini.

Whatever the underwriting process looks like, it’s important to maintain healthy habits.

“Sometimes, you may have to take a small physical exam, have a urine test, or bloodwork. Make sure you are taking care of yourself physically by drinking plenty of water, exercising ,and eating healthy. The insurance companies may ask you questions about your health background. Make sure you answer their questions honestly, but don’t give out more information than they need,” advises Welka.

Any other advice?

Welka adds, “Talk with a professional who can guide you through the process of buying life insurance so you find the best, most affordable policy for your lifestyle.”

Dubauskas confims that "Life insurance provides peace of mind, knowing that in the unlikely event something happens, life insurance will be there to help. For millennial women who have never purchased life insurance before, buy a small amount of term life insurance and increase it as you need it later."

And Tomasini's final advice: “The longer you wait to get life insurance the more costly it might be. Also, being able to qualify for medical reasons is important. There are a lot of myths about life insurance and many are shocked about all the benefits and truly how affordable it is.”

Millennial life insurance

Fully evaluating your situation will help you determine the amount of coverage you need and the kind of policy that would work well for you. Buying life insurance sooner rather than later will also help you qualify for lower premium rates.

Asking questions, working with a reliable, independent life insurance agent, and understanding the application process will also help you successfully navigate buying life insurance.

Want more life insurance advice? Check out these articles:

• 5 Pieces of the Worst Life Insurance Advice
• 5 Pieces of the Best Life Insurance Advice