Why Should Millennials Have Life Insurance?

Much has been discussed about how millennials have different goals and challenges than earlier generations. Often they are saddled with enormous student loan debt, and they tend to marry later in life as well as delay having children or buying a home. Therefore, life insurance might not be at the top of their financial goal list. However, here are several reasons why millennials should consider buying life insurance:

• Buying life insurance earlier in life helps millennials lock in the best rates while they are young and healthy, and gives the policy’s cash value time to grow.
• The cash value in permanent life insurance can be a tax-free way to supplement retirement income, or pay for unexpected expenses such as health care costs, while the death benefit provides a tax-efficient way to leave money to heirs.
• Permanent Life Insurance allows millennials to take distributions from their policy to meet their particular needs. Distributions generally have no 10% penalty on withdrawals prior to age 59½ and cash values and/or death benefits are often protected from creditors (depending on state law).
• By putting this financial cornerstone into place now millennials can have a leg up on their financial future.

Article by Matt Logan.

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Accessing cash value will lower the policy's cash value and death benefit and may require additional fees to remain in force. Policy loans from life insurance policies generally are not subject to income tax, provided the contract is not a Modified Endowment Contract (MEC), as defined by Section 7702A of the Internal Revenue Code. A policy loan or withdrawal from a life insurance policy that is a MEC is taxable upon receipt to the extent cash value of the contract exceeds premium paid. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59½, with certain exceptions. Policy loans and withdrawals will reduce cash value and death benefit. Policy loans are subject to interest charges. Consult with and rely on your tax advisor or attorney on your specific situation. Income and growth on accumulated cash values is generally taxable only upon withdrawal. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a Surrender Charge period will be subject to surrender charges and may reduce the ultimate death benefit and cash value. Surrender charges vary by product, issue age, sex, underwriting class, and policy year.