Something Every Millennial Should Know! (IMPORTANT)

Life insurance is something that is just beginning to cross the minds of some millennials, but the majority of us don't even know much about it. To start things off, there are two types of life insurance. Term and permanent. Term insurance is rental insurance. You have it for a set amount of years. Permanent life insurance, on the other hand, covers your entire life. Indexed Universal Life, IUL for short, is a form of permanent insurance and is the one I believe will benefit millennials the most. In this article, I will briefly go over what these benefits are how life insurance can be the solid foundation of any financial plan.

To start things off, IUL's give you the ability to invest money in an extremely safe manner. Every policy has something called a cash value. The cash value is basically the part of the insurance policy where your money accumulates. A portion of your monthly premium will go to fees, such as the cost of insurance, and the rest will go to your cash value. You are credited interest based on the performance of the S&P 500 index, but protected from any market downturns. For those of you who aren't familiar with the S&P 500, it is made out of 500 of America's largest companies. If you believe in MURRICA, then you'll believe in the S&P 500. In short, when the market goes up, your cash value with grow along with it. When the market goes negative in any given year, you are given a return of 0% effectively protecting you from any loss. Which would you rather be? The green line or the red line?

This strategy follows two of Warrens Buffet's most famous teachings. Indexing is one of the best ways to grow wealth, and never lose money investing.

If you look at the historical data for the S&P 500, you can see many crashes and downturns over the years. Wouldn’t it be nice to not lose money every time the market decides it wants to take a dive into a pool of red? For sure the market will want to go diving many times before you retire. I know your parents would have loved to have part of their money protected when 2001 and 2008 happened.

As a millennial, time is on your side. You do not need huge returns to grow your money fast. Instead, having a safe way to accumulate money provides an excellent foundation for any financial plan! 401ks, IRAs, and mutual funds can come later when you are making more money. Diversification is the key to successful investing and an indexed life policy can be a crucial asset that mitigates risk. The best part is, all your capital gains in the cash value of the policy are tax-deferred and your withdrawals are tax-free! This effectively reduces the number of times good old Uncle Sam takes your hard earned money! You can also access this money without early withdrawal penalties like many other retirement savings vehicles.

Originally, the only people who directly benefited from life insurance were the loved ones left behind. Now, with the introduction of "Living Benefits," you can access that money when you need it the most. Living Benefits provides protection from financial burdens if you ever get a critical illness such as cancer, heart attack, stroke, ALS, blindness, major organ transplant, and end-stage renal failure. This can be such a lifesaver because these illnesses are extremely expensive to treat. Health insurance won't cover all the costs and if you can't work your source of income will be lost. Money is really the last thing you want to be stressing about if you get sick. If you're protected, you can fully focus on recovery.

Living Benefits can also protect you from critical injuries resulting in coma, paralysis, traumatic brain injury, or severe burns. Did you know 20-50 million people are injured or disabled from car accidents every year? (National Life Group is currently the only company offering protection from critical injuries.) Lastly, your death benefit can also be accelerated if you ever develop a chronic illness that prevents you from doing 2 of the basic 6 activities of daily living. These six activities consist of eating, bathing, dressing, toileting, transferring, and maintaining continence.

Now you may be thinking, "This doesn't really apply to me. I'm young and invincible!" but the reality is SHIT HAPPENS. I've seen it happen to my friends and family and I'm sure you've experienced it too. Bad things happen to good people and bad people. If you are not prepared, one incident can potentially destroy you or set you back years of hard work. On top of that, life insurance is actually the cheapest when you are young! You get more expensive to insure each time your friends sing you Happy Birthday!

The majority of life insurance companies do not offer living benefits. If you have friends or family with life insurance policies, help them check to see if they have these life-saving benefits! Don't listen to what the insurance agent says! If it's not written in the contract, then you don't have them!

Of course, just like any other life insurance, your beneficiary will receive a death benefit if you are unlucky enough to face an early death. While most millennials think this is useless to them, I disagree. Many millennials have student loans that have yet to be paid off. If you do leave us for a better place early, there's not much for you to worry about. You’re dead. But, whoever co-signed your student loans or any other debt you may have are now responsible for them. In most cases, your co-signer is your parents. Do you really want to leave your debt to your parents on top of them having to bury your ass? Funerals are expensive you know.

Indexed Universal Life is the perfect way to kill three birds with one stone. Dying too soon, getting sick, and saving money for retirement. You will get life insurance eventually, why not reap more benefits and get it while you're young(cheaper) and while you have more time? (more time for your money to grow)

If you learned something new from reading this please share it with your friends and family! If you have any questions feel free to message me!