Should Life Insurance Be Part of My New Year’s Resolution?
It’s that time of the season when we start to set the list of New Year’s resolutions for ourselves: eating better, exercising more often, and saving some extra money. But what about those selfless resolutions that impact those around us and who we care about most? Being more kind is a start, and so is minding your “P’s” and “Q’s”; however, these types of actions often fall flat as the year rolls along.
It might be time to consider some steps you can take that protect those you love. As troublesome as it sounds, buying life insurance is one of the most selfless decisions you can make for protecting your family. Unlike other resolutions, purchasing life insurance isn’t about you; it’s about the ones you love. And there are a few important tips and tricks that can help in the search for the right kind of coverage.
So what is life insurance anyway?
At its core, life insurance is cash paid to your significant other, children, or other beneficiaries in the event of your passing. When it comes to life coverage, you have two choices: Permanent life, which typically includes some level of cash value and covers you for a lifetime as long as you pay your premiums on time, and term life, which expires after a pre-defined length of time, usually 10, 15, or 20 years. Younger people typically get lower rates because they’re healthier, on average, than older generations.
“Millennials often think life insurance doesn’t apply to them or that they have time to put it off. That’s a costly myth which needs busting,” says SoFi’s Andrea Blankmeyer. “The younger you are, the better the rates you can lock in for the long term.”
Blankmeyer is the VP of Finance at SoFi and is instrumental in establishing SoFi’s partnership to make term life insurance from Ladder available to our members.
Cashing In On Your Youth
The more successful you continue to be, the more important protecting your family becomes. Many millennials choose to purchase life insurance at key moments, such as buying a house, the birth of a child, or getting a promotion. But because of the savings, buying sooner, such as when just thinking about those milestones, becomes even more attractive.
For example, a 35-year-old male in excellent health and who’s never smoked could expect to pay just $37.12 a month for a 20-year/$1,000,000 policy when insuring through SoFi’s partnership with Ladder. By contrast, when looking at policies from other insurance providers, a similar male applying with the exact criteria could pay as much as $59.85 a month.
“Lots of factors, including age, health and financial needs, figure into what you’ll pay to get insured,” says Blankmeyer. “In some cases, your occupation can even affect your rate.”
To be fair, most young professionals aren’t penalized premium-wise for their career choices. Tightening your tie to face an angry CEO isn’t the same as tying down for a rough night of crab fishing on the Bering Sea, like fisherman do on The Deadliest Catch. Still, it matters what you do. Expect to pay a little more if you’re an extreme sports junkie with a history of ER visits. Virtually everyone else will save by starting younger.
Term Life vs. Permanent Life: What You Need to Know
Your choice of policy is also a huge factor in premium costs. Term life tends to be more affordable because, unlike permanent life insurance, it covers a pre-defined period and keeps the same fixed premium throughout the duration of that time. Permanent Life, on the other hand, is designed to cover you for the entirety of your life and can provide additional benefits such as cash value, which can help with retirement. Along with these extra bells and whistles also come increased premiums that can fluctuate. Term life attracts millennials because they can obtain peace of mind for protecting their loved ones for a relatively low monthly rate.
Peace of mind involves thinking through everything you want your policy to cover. So be comprehensive when researching, and ask questions specific to your life concerns and goals. For example, if you want to wipe out a $500,000 mortgage and send your kids to Harvard instead of Hometown Community College, how much coverage will you need? How much will your significant other need to maintain your family’s lifestyle? Use this calculator to run different scenarios and get a few estimates.
Once you’ve taken stock of your needs and desires, follow these three tips to find the right policy at the right price:
1. Reputation matters. The whole point of life insurance is that it’s there when you need it. So beware of fly-by-night operations that have a dubious history of paying claims. Before signing on with any company, check its financial stability using A.M. Best’s handy screener. Think of it like J.D. Power or Consumer Reports, but for the insurance industry.
2. Buy for protection, not profit. Even if you like the idea of getting a return from your permanent life policy, make sure that what you’re buying actually provides the protection you and your family need. Read the fine print and, if you need a pro, contact Ladder’s insurance experts for help at [email protected] or (855)-622-0299.
3. Shop online. Historically, buying life insurance has been a long and tense process that’s a lot like being subjected to a lean-over-and-cough exam by this guy. But the days of face-to-face meetings, filling out long and confusing forms, and then waiting weeks to find out if you’ve been approved, are, for the most part, over.
While a handful of old-school insurers shy away from the benefits of technology, more and more companies are taking a page from SoFi and Ladder, and simplifying the shopping process online. Using online tools, such as this calculator saves busy professionals a lot of valuable time. SoFi has partnered with Ladder so and apply online in about 5 minutes for instant coverage. They offer up to $8 million in coverage—in many cases, with no medical test*.
**Coverage amounts range from $100k up to $8 million. Instant coverage may be available to applicants that meet certain risk and eligibility requirements. A medical test may be required for applicants that do not meet these eligibility criteria.Ladder policies are issued in New York by Allianz Life Insurance Company of New York, New York, NY (Policy form # MN-26) and in all other states and DC by Allianz Life Insurance Company of North America, Minneapolis, MN (Policy form # ICC20P-AZ100 and # P-AZ100). Only Allianz Life Insurance Company of New York is authorized to offer life insurance in the state of New York. Coverage and pricing is subject to eligibility and underwriting criteria. SoFi Agency and its affiliates do not guarantee the services of any insurance company. The California license number for SoFi Agency is 0L13077 and for Ladder is OK22568. Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other. Social Finance, Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderLifeTM policies. SoFi is compensated by Ladder for each issued term life policy. SoFi offers customers the opportunity to reach Ladder Insurance Services, LLC to obtain information about estate planning documents such as wills. Social Finance, Inc. (“SoFi”) will be paid a marketing fee by Ladder when customers make a purchase through this link. All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.