Most traditional life insurance policies require a medical examination and meeting with a sales person, processes that do not appeal to millennials used to making a transaction with a few clicks on their smartphones.
Some insurers have come up with new ways to attract millennials. In May, USAA added an option allowing young people to increase coverage at key life events, such as having a child, without additional underwriting.
Also in the spring, MassMutual started a life insurance company called Haven Life to target younger customers. To minimize the intimidation factor, Haven Life offers immediate decisions on up to $1 million in term coverage from top-rated carriers, and the underwriting process occurs online.
Misjudging Prices
When Haven Life opened for business, Shonkwiler was among the first customers. He had spent close to 50 days working with a traditional life insurance company, and the mountains of paperwork and questions were wearing him down.
As a young, healthy non-smoker, Shonkwiler was frustrated that the coverage he wanted did not seem available. The online process at Haven was much smoother and was completed in a week, he said. His $500,000, 20-year term policy costs $25 a month.
That is less expensive than many people would think. In fact, 80 percent of all consumers misjudge the price for term life insurance, which is purchased in blocks of time like 10 or 20 years and does not yield a payout unless there is a qualifying event.
The survey by Life Happens and Limra found that millennials believed a healthy 30-year-old would have to pay $600 a year for a 20-year $250,000 policy. The annual rate is actually as low as$160, the organizations said.
Myriad other insurance options are available besides term policies, which offer more complicated investment opportunities and have different pricing structures. But anyone considering those should consult an independent financial advisor.
To do the math on what kind and how much insurance you need, you can call individual insurance companies to compare, or get information from companies like Life Happens and Bankrate.com, which have easy-to-use calculators.