If you’re a millennial — born between 1981 and 1996 — you’re either in the very early or relatively early stages of your career, and as the old song goes, you’ve got a lot of living to do. Still, it’s not too soon to think about a financial issue you may have overlooked: the need for life insurance.

Regarding this topic, millennials need to ask three key questions:

When should I purchase insurance?

If you’re a young millennial, perhaps just out of college, single, and living in an apartment, your need for life insurance may not be that great. After all, you may well have other, more pressing financial needs, such as paying off your student loans. But if you’re an older millennial, and you’ve got a mortgage, a spouse and — especially — children, then you unquestionably need insurance, because you’ve got a lot to protect.

How much do I need?

Millennials who own life insurance have, on average, $100,000 in coverage, according to New York Life’s 2018 Life Insurance Gap Survey. That same survey found that millennials themselves reported they need coverage worth about $450,000. That’s a pretty big gap, but these figures are averages and may not apply to your situation. You might have heard that you need life insurance worth about seven or eight times your annual salary. While this isn’t a terrible estimate, it doesn’t apply to everyone, because everyone’s situation is different. A financial professional can look at factors such as your age, marital status and number of children to help you arrive at an appropriate level of coverage.

Keep in mind that your employer may offer life insurance as an employee benefit. However, it might be insufficient for your needs, especially if you have a family, and it will probably end if you leave your job.

What type of life insurance should I get?

Many people initially find life insurance to be confusing, but there are basically two types: term and permanent. Term insurance covers a given time period, such as 10 or 15 years, and provides only a death benefit. It’s generally quite affordable, especially when you’re young and healthy. Permanent insurance, on the other hand, offers a death benefit and a savings component that allows you to build cash value. Consequently, the premiums are higher than those of term insurance. A financial professional can help you determine which type of insurance is most appropriate for your needs.

You may also need disability insurance, which can replace part of your income should you become ill or incapacitated. And you may eventually want to explore long-term care insurance, which can help cover you for the enormous costs of an extended nursing home stay.

You should consider all forms of insurance as part of your overall financial strategy. The future is unknowable, and as a millennial, you’ve got plenty of future ahead of you.

Julie Falleta Dinkel is a financial advisor for Edward Jones, 1755 Telstar Drive, Suite 202. Contact Julie at 593-8500.

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