Insurance for Millennials When Youth Actually Works For You

Millennials Face Stretched Finances, But Get Cheaper Insurance While They’re Young

According to recent research, those born at the start of the 1980s are, on average, only half as wealthy as those born in the early 1970s thanks to debilitating student debt, racing house prices, shrivelling company pension offerings, wage stagnation, cratering interest rates and the rise of the ‘Gig Economy’.

With all this in mind, it’s no wonder the term ‘millennial’ is fast becoming a by-word for ‘hard-up’.

The problem is so extreme that the millennial generation are the first post-war group to be worse off than their parents.

This is why people of my age are often labelled the ‘Peter Pan’ generation, because so many of us have had to put off reaching the milestones that previous generations rounded far earlier. These include leaving education, leaving home, getting married and starting a family, while buying your first home is often a distant pipe dream.

Josh Martin
Independent Protection Expert at Drewberry

Just Being Young Can Help You Get the Best Income Protection

As well as being late to all of these other major milestones, millennials are also often late to the party when it comes to securing worthwhile levels of Income Protection and Life Insurance.

Of course, this is also true for Britons across the age spectrum, with many of us seeking out protection products after life has forced our hand.

Sometimes it’s because they’ve seen what happened to a family member or friend who has suffered an illness or injury and didn’t have the proper cover in place, but more common triggers for getting insurance cover include buying a property or starting a family.

It’s these triggers that put millennials at particular risk from not having adequate protection – with so many of the catalysts for seeking life cover deferred for millennials, it’s not surprising that, as a group, they tend to be slow to take up life insurance.

Yet when you’re young, you tend to have very few serious health conditions, which means you get far more comprehensive cover. As you get older and develop medical conditions – especially things like bad backs – you’ll start to find insurers excluding you for pre-existing medical conditions.

So getting covered as a young person means you’ll probably face few if any exclusions and get the best Income Protection possible for you.

In terms of insurance, millennials will be better served getting on the ‘protection ladder’ sooner rather than later. Taking out Income Protection or Life Insurance as a young person is actually one of the few areas where youth in on your side.

The cost of insurance for younger people is so low it’s usually cheaper overall to put your cover in place while you’re still in your 20s, even if you don’t have a mortgage or a family to worry about yet.

Rob Harvey
Independent Protection Expert at Drewberry

If you do eventually buy a house or start a family, some insurers offer a guaranteed insurability option. This lets you increase your benefit later on without having to be medically underwritten again if you get a pay rise, have a child, take out a mortgage or reach another set milestone. Although the price will rise due to the increased benefit and the increase in age, not being underwritten from scratch means any medical problems you’ve suffered while the cover has been live won’t count towards the cost.

Lots of Options: The Market for Insurance for Millennials Looks Bright

The good news for millennials who recognise the benefits of Income Protection Insurance and life cover is that the UK insurance sector has never looked more robust. Income Protection payout rates are sky-high and product innovation abounds, while Life Insurance payout rates across insurers are in consistently above 95%.

Much of this is thanks to the advent of the digital age and it’s millennials that are best placed to take advantage of this.

Income protection cover should really still be the first priority for anyone who’s started earning. This is something that most of us will need long before we come to buy a property or start a family.

If you think you’re a ‘hard up’ millennial now just wait until you’ve been unable to work for a few months following an accident or ill health. Being young doesn’t mean you’re immune from accident or sickness, as these can strike at any time.

Sophie Wilson
Independent Protection Expert at Drewberry

Income Protection with guaranteed premiums can lock in the cost of cover based on the age and health you are when you apply. This is beneficial because insurance starts to get expensive once you get into your forties, even though that’s when you’re likely to want it most.

Of course, premiums will rise if you want to increase your cover at all along the way, or if you’ve indexed the benefit to ensure it keeps up with the cost of living.

However, providing you’re happy with the benefit you took out while you were young, premiums could potentially be the same for the life of the policy, which may last into your 60s.

Free Advice on Insurance for Young People

It’s worth keeping in mind that dedicated protection advisers such as those on the team at Drewberry can help with getting insurance for a young person. We recognise that just because you’re young doesn’t mean you don’t need insurance to protect your income.

Just ask Ben Weatherhead, a 23-year-old from Harrogate, who Drewberry helped get Income Protection covering him as a builder. You can read his story here →

Some people also wonder whether they can be too young to get Life Insurance, but it never hurts to be cautious, especially if you have responsibilities such as a mortgage.

This means that millennials can book themselves an annual protection review with an adviser, or just get some advice when their circumstances change, without having to worry about the cost.

It’s usually cheaper to enhance an existing policy than it is to seek new cover later down the line so for millennials the best protection tips are probably to get on the ‘protection ladder’ as soon as possible.

Another point is that finding a decent adviser who can do all the leg work for you, without asking for a penny in fees, can be worth its weight in gold.

Tom Conner
Director at Drewberry

I had a great experience with Drewberry, they have a lot of knowledge and expertise with life insurance and income protection and were able to advise me and arrange suitable products. Highly recommend.

Lachlan Mellings
12/08/2020
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