Thursday, November 2, 2017
Insurance for Millennials: 3 Must Have’s
Recent studies have shown the Millennials are the least insured generation in recent history. It got me wondering why this is. What would cause the generation with the most access to knowledge ever, to not understand the importance of insurance? Was it because their parents didn’t have insurance? Well, that isn’t true as studies have shown that Baby Boomers have always been thoroughly insured. I think the answer is twofold:
- Millennials haven’t been given the proper education in terms of insurance, which requires a personal discussion about its importance, usually from an expert
- Millennials have been burdened with debt from the outset of their young lives and adding an expense every month that may seem unnecessary seems foolish
I will aim to help Millennials to truly understand what types of insurance should be important to them. You are mandated by law to have home insurance and auto, but personal insurance is a different story. It is totally voluntary. Personal insurance is a personal choice, a choice about what your priorities are. In this post, I will show you the 3 types of insurance that young people should have along with the cost. The hardships of being young in this economy will only be exasperated if you don’t have coverage, so let’s look at what’s important
Health Insurance
I went 8 years of my life in early adulthood without personal health insurance. It was 8 years without visiting the dentist. 8 years with having to pay out of pocket for medication. 8 years without having an eye exam. Luckily for me, I have never had a cavity and my vision is that of an owl. Unluckily for me, I have huge prescription drug costs. It is imperative that young people look into getting personal health insurance if they don’t have it through work. If you are job hunting, choose a job with coverage over a job without. This should be one of your top qualifiers when it comes to employment. You need to be sure that a job will go to bat for you as much as you are willing to go to bat for it. 80% of people would choose a job with benefits and lesser pay over a job without and higher pay.
For those who have no benefits through work, look to personal coverage for your routine expenses. Things like dental, vision, prescription drugs, chiropractic, travel and orthotic expenses can crush your wallet. Many insurers are able to offer you this form of coverage because the usage is pooled and the risk is shared. Also, large insurers are able to use their size to get items at discounted rates. Missing work because you are sick is one thing. Missing work because you are sick because you can’t afford your medication is another.
Expected Cost: $50-$200 monthly, dependent on extensiveness of health plan
The High Cost of Prescription Drugs in Canada – CBC
Living Benefits Insurance
Being young and in the workplace is tough. You often start at entry level working for far less than you are worth. You try to climb the ladder all the while you are battling student debt and the desire to do all the things young people wish to do. Your monthly budget is tight and you feel you have no room to add any other expenses. Some people think that this is a good reason not to get Disability or Critical Illness Insurance. They are absolutely wrong in this thinking. It is because money is tight that you need these forms of insurance. If money is tight now, how would you live on 30-50% less income every month? Many employers don’t offer short-term or long-term disability. Almost none offer Critical Illness Coverage. These forms of coverage can be as cheap or as expensive as you want them to be. It all depends on the amount of coverage you wish to have. Ideally, you would replace as much of your income as possible, but if that is not possible make it a goal to cover your expenses. Here is the kicker: Both forms of coverage have options where you can get some or all of your money back if you never make a claim. If only home and auto insurance offered that.
An injury or illness could take you away from work for weeks or even months. Not having much in your budget now means you might have nothing in your budget should you get sick. Here are some key Cancer stats:
- -An estimated 206,200 new cases of cancer and 80,800 deaths from cancer will occur in Canada in 2017.
- -Half of all new cases will be lung, colorectal, breast and prostate cancers.
- -About 1 in 2 Canadians will develop cancer in their lifetimes and 1 in 4 will die of the disease.
- -60% of Canadians diagnosed with cancer will survive at least 5 years after their diagnosis.
- -At the beginning of 2009, there were about 810,000 Canadians living with cancer that had been diagnosed in the previous 10 years.
The most telling stat to me was that 60% of Canadians live at least 5 years after being diagnosed. What kind of quality of life do they have while they are battling this disease? How long before financial hardship occurs? This form of coverage can be a cheap or as expensive as you want it to be, it all depends on the amount of coverage you choose. Look into protecting your quality of life while you are young.
Expected Cost: $20-$200 monthly depending on desired coverage and health
Canadian Cancer Statistics – Canadian Cancer Society
Life Insurance
Many young people are under the assumption that life insurance is for older people. The truth of the matter is that life insurance was specifically designed for young people. The reason that is the case is that life insurance only covers people that are healthy and young people are generally healthier than older people. The coverage is designed to be purchased when someone is young because it is cheap at that time. When you get older the likelihood of chronic conditions rises and therefore insurability may become an issue.
Young people who think they have no obligations in regards to final expenses are wrong as well. The chances of you dying at a young age are slim, but if you did what would happen? Who would pay for the funeral, which can cost upwards of 15-25K? Who would cover the debts that were cosigned for school or line of credit? What would your loved ones remember during that time: That they have to clean up all the loose ends or that you planned ahead and made their lives easier because you cared about them? I have had 3 friends in the past 2 years pass on, all under the age of 30. Two groups of friends set up GoFundMe pages to help cover the funeral and one person who died had life insurance. It is always sad to see a friend leave, but I would rather deliver a large cheque than give a small amount to a GoFundMe page. Just like the other forms of insurance, life insurance can be as cheap or as expensive as you want it to be.
Expected Cost: $20 monthly and up, depending on coverage amount and health
Young People Pass on Far Too Often – GoFundMe Memorials
The nature of insurance is simple: You pay someone else to take on their risk of something happening. You either don’t want the burden of cost or can’t afford it. Some people say that rich people don’t buy insurance. That is absolutely false. Rich people buy the most insurance because they know that they can pay a small amount to cover a large risk. People with a lower income should think this way as well. The only difference between the 2 groups is that rich people have a greater ability to bounce back if not insured. If you are in a lower or middle-income bracket, insurance MUST be a part of your monthly budget. The consequences could be huge.
Thanks for reading our post today on insurance as Millennials Week continues at Budget Boss. Don’t forget to tune in tomorrow as we wrap up the week with our Outlook for Young People. If you would like to discuss insurance or receive a quote please contact me at joe@budgetboss.ca. Have a great day friends!
“Fun is like life insurance; the older you get, the more it costs.” – Kin Hubbard
Email – joe@budgetboss.ca
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