Do millennials need life insurance? I just finished with the process and wanted to help others as it can be a confusing process. After reading Sam at Financial Samurai’s SO-FI life insurance review I wanted to document my process of getting life insurance. I use the word process because it’s not something you do one day and have coverage the next day.
Do You Need Life Insurance
Do you have kids? Are you married? Do you have a long-term significant other? If none of the above you probably don’t need life insurance at this time in your life. But if you do have kids, are married, or have a significant other you want to be protected. What kind of life insurance should you buy? Universal, whole, or term? Why didn’t college teach us the basics? (another reason I wrote my book).
Term vs. Whole Life Insurance
Term life insurance
Term life insurance will pay out a set amount in the event of your untimely death. The amount you want insured can vary but typical amounts can be anywhere between $200,000 to $1,000,000. The higher the payout amount the higher your deductible. Usually, the terms are between five and thirty years. The longer the term the higher the deductible. As you’re healthier (usually) when you’re younger it’s easier to secure a lower rate now than in your 40’s or 50’s.
Whole Life Insurance
Whole life insurance provides death benefits as well as cash value during the life or your policy. Like term life insurance it can be secured with or without a medical exam. If you opt out of the medical exam the policy will be significantly higher! According to Trusted Choice it can take 12 to 15 years to build up a decent cash value. It can also be a good idea for estate planning.
Millennials should choose term life insurance over whole life insurance the majority of the time. Otherwise you will pay more than you should at this stage of your life.
The Process of Getting Life Insurance
A 2017 goal was to secure life insurance for Ms. Super Millennial & Munchie before I was thirty years old. With the b-day approaching soon I got started at the beginning of February. I got started with SoFi Life after doing some research online. The process started by submitting an online questionnaire and chose coverage selections. The inital quote is super easy and only have to answer a few questions.
Initially I chose a 20 year term (the longest term SoFi offers) and the highest coverage; $1,000,000 (lot of zeros). Choosing your coverage is something I recommend you spend some time deciding. Don’t just pick randomly.
Factor these into your decision:
- Your net worth
- How much the beneficiary uses
Surprisingly the monthly payment does not increase to much compared to how much extra your beneficiary would receive in the unlikely event of your death (sorry to be such a downer).
Here are a few quotes based on: 29 year old male or female – excellent health – non smoker.
Once you submit your questionnaire you will usually get a call within 24-48 hours. As I mentioned SoFi is different than most life insurance providers and can accept your application without a medical exam. Much to my dismay I have had past conditions that required me to get a medical exam. They setup the exam on the call and did another questionnaire, this one much more in depth.
This questionnaire sucked I won’t lie. It took over 45 minutes and felt like I was getting grilled about every doctor visit in the past decade. They require a lot of information. If you decide to get life insurance I would encourage you to be prepared. To prepare make sure you have all your prescriptions, doctors contact info and past issues ready. Once the interrogation (I mean questionnaire) was over they gave me adjusted rates and setup my appointment. The “physical” is no additional cost to you and is schedule by an outside team.
The following day I got a call from the lab tech who said I could go into their office or have them visit my house. All that was required was a blood test, urine sample, height/weight, and blood pressure. I got the appointment scheduled for a week later and tried to live really clean the few days beforehand to ensure the results were optimal. This included no alcohol, low salt, low caffeine and plenty of fluids. On the eve of the exam I had to fast 12 hours and only drink water as needed. Fasting with a house full of food sucks!
The following morning I woke up an hour before the appointment, didn’t have any coffee or breakfast and tried to keep anxiety down. I’m one of those guys that hates doctors/medical visits so it wasn’t a fun morning. Once he arrived it was a painless process (unless you don’t like getting your blood drawn) that lasted 25 minutes. As mentioned, I had to provide a urine sample, draw blood, measure my blood pressure, answer a few questions, and sign all the paperwork from my previous questionnaire. It was ironic when he was asking about my lifestyle that he was staring at the liquor cabinet (whoops). Two days later I received the comprehensive medical breakdown. Everything checked out good. The policy then went into underwriting for someone to review.
Finalizing the Life Insurance Policy
After waiting an obnoxious amount of time (3 weeks) I got approved for life insurance. As my rates changed with past medical issues I reduced the coverage from $1,000,000 to $600,000 to align with my budget. I opted to pay the deductible in full annually. This lowered the cost instead of paying monthly or quarterly. If possible pay by annual amount to save $50-$100 per year. The entire process took 6 weeks from start to finish but doesn’t require much on your end. If you have someone in your life you want protected in case of an emergency buy life insurance. Its relatively low costs and protects the ones you love most.