When you are young, life insurance is probably the last thing you think you need. Life insurance is not (and has never been) an easy topic to talk about. Let's face it – no one wants to think about death. Or we think about it too late, when insurance may not be obtainable (and is definitely cheaper).
Therefore, it is important to get life insurance when you are young. You are probably healthier, so a life policy is cheaper. (Read more in this list of 6 reasons why millennials should consider life insurance.)
It is also the perfect time to add a rider to the Guaranteed Insurability Option (GIO).
I recently talked about life insurance with my ERIE life insurance agent. , Tony Cusati from Sitter Insurance Agency in Erie, Pennsylvania, after buying our starter house and getting married.
To help me protect my belongings ̵
We had a valuable and insightful conversation. Here, Tony answers my questions about why life insurance is so important when you are young and why you should consider a rider with a guaranteed insurance option.
First, why is life insurance so important?
Life insurance helps you to be proactive instead of reactive. I've seen it on my own. My dad passed away at the age of 40 when he was really young. It was unexpected. He had no life insurance and my mother really struggled without him. Having experienced this makes it even more important for me to talk about life insurance with all my clients.
If this is your first time considering life insurance, read these eight tips.
Many young people do not have life insurance. Why do you think that?
There is such a gap in generations when it comes to seeing the value and importance of life insurance. According to Forbes, only 10% of millennials say they have enough life insurance to cover their needs. Millennials do not see the importance of getting it now, when they are healthy, instead of later, when their health is likely to decline. Or they have the misconception that it is very expensive – which is not true.
To start the conversation, I often ask:
It may be easier to consider when they have debts to pay or a family depending on them. If a young person has never experienced death on their own, it can be difficult. They have never treated a family member or a high school friend who passed away, so they have probably never had to think about it. They still put their family in danger, even if they delay life's milestones such as buying a home or starting a family.
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For a young person, I take budgets into account. A permanent life policy may not make sense right away, so I would suggest a term policy instead of it being cheaper. We also have the product ERIExpress Life which is easier to get and reasonable to afford, and you can get it without the need for a physical examination. 1 You can pay money now that may never pay out; but it is your safety net for you and your family, no matter who you protect.
Read more about the difference between term insurance and full insurance.
What is the importance of the Guaranteed Insurance Alternative (GIO) and why would anyone really want it? Can you lose it?
You have no idea what will happen to you in three years, five years from now or ten years from now.
If someone calls me after receiving a terminal or serious diagnosis, it is unfortunately already too late to help them get life insurance. If you get a life policy with GIO when you are young, you already have it in place should you develop a condition such as heart disease or cancer.
When you get the rider, you create the ability to protect yourself throughout your life and you have it as long as your policy exists.
Once you have been approved by insurance, the rider is a bound contract – the only way you can lose it is if you stop paying your policy. There are some restrictions: you can only increase your coverage via your GIO rider up to the age of 46, and you cannot exceed the maximum coverage of one million dollars (excluding your first insurance). Your local ERIE agent can help explain coverage details, terms and conditions so you can understand how your coverage works.
How can someone increase their life insurance coverage if they need more protection?
You can easily increase your life insurance coverage when qualified life events occur when you have the GIO rider. They are married, buying a home and having a child. This is how it works that you can add more life insurance through an extra life insurance – without having to go back through insurance.
You have the option to add coverage due to your GIO rider at certain ages, starting at 25 years up to 46 years (basically every three years). The most coverage you can add at any one time is $ 250,000. 2
This is how I laid out Alex's life policy. She already had a 30-year policy in place for two years before she got married and bought a house. When she called me and asked how she would increase her coverage so that her husband would not lose his home if something happened to her, we decided on a second 30-year policy with a GIO rider.
When I told Alex the total premium she would pay each month for over $ 200,000 coverage between both of her insurance policies, she laughed – it can really be so affordable.
Life insurance can be a difficult topic to talk about, both for agents and their clients. What advice do you have for addressing the subject?
We all know we will make it; we just do not know when. It's hard, it really is. But tear off that bandage for a few hours to talk to your insurance agent, and then you have that peace of mind.
Imagine being on the other side of the table, as the agent. This is a difficult topic to talk about. If you can be sincere, maybe poke some humor in there and share real stories, break that wall long enough to make sure your customer is covered.
Protecting Yourself Now for the Future
Talking about life insurance is not an easy conversation to have, but it is definitely worth having.
Life insurance is a proactive protection for both you and your family – and it is easier to get when you are young. To learn more about the life insurance policies you have access to – including the Guaranteed Insurance Options rider – talk to your local ERIE agent.
1 Guaranteed insurance option Rider is not available with the product ERIExpress Life.
2 Some restrictions apply. Talk to your agent for more information.