Life Insurance for Generation X

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Paying off student loans, buying a house, raising kids — there are many different reasons to buy life insurance.

Most of these reasons resonate more with Millennials, but Gen Xers — the “forgotten middle child” among generations — still fall into the sweet spot for buying life insurance.

Gen Xers are in a different stage of life, entering their peak earning years but still paying down their mortgages and saving for their kids’ college education.

Now cruising into their 40s and 50s, Gen Xers may have abandoned their beepers, flannels, and Pearl Jam tapes — but they haven’t outgrown the need for life insurance. In fact, many Gen Xers need coverage now more than ever.

Now that you’re reminiscing about your Trapper Keepers and humming “Come As You Are,” let’s talk about life insurance and finding the right fit for you.

Who Are Generation X-ers?

Gen Xers are “the forgotten generation,” sandwiched right between the 75 million Baby Boomers and the 83 million Millenials.

At 65 million strong, Generation X is mostly known for watching MTV back when music was actually played, eating Hot Pockets, watching Reality Bites, and embracing color and change with that “too cool to care” groan-worthy of Kurt Cobain.

Having grown up as free-range kids (before it was a thing), Gen Xers have exchanged their Sony Walkmans and high tops for careers and picket fence families.

Now in their 40s and 50s, many Gen Xers barely survived the early 2000s, losing almost 60 percent of their incomes in the Great Recession and its subsequent housing debacle.

By now, most Gen Xers have recovered most of their net worth, but they are still lagging when it comes to having enough life insurance.

According to New York Life’s 2018 Life Insurance Gap Study, the average Gen Xer has a 48 percent coverage shortfall in life insurance. Studies show they need no less than $525,000 in coverage but obtain only $272,000 — if any at all.

There are several reasons why, as a flannel-wearing member of Gen X, you need life insurance.

Why Get Life Insurance As A Gen Xer?

The Great Recession nearly bankrupted Generation X, creating a mentality of essentials-only and rendering life insurance — which you can’t see or feel — a luxury.

Even after entering their peak earning years and reaching middle age, thinking of their own mortality and obtaining a policy just falls low on a Gen Xer’s list of priorities.

Large flat screen TVs, daily lattes, and trying to figure out TikTok on their kids’ smartphones registers higher on their list of life “to do’s.”

But it’s an awkward stage of life financially. About 47 percent of 40- to 50-year-olds are taking care of an elderly parent while simultaneously raising a minor or supporting a perhaps grown child.

That’s a lot of financial strain, which means there’s a lot to lose if you die unexpectedly and can no longer keep things floating financially.

Buying life insurance can help give peace of mind. If you died with a policy in place, the coverage could help pay off that remaining student loan debt and the mortgage. The policy’s payout could even boost your child’s college fund.

Life insurance can create some financial peace of mind for your family members by helping protect them when you can no longer do so. After all, life insurance isn’t for you. It’s for them.

Gen X Life Insurance Misconceptions

According to the New York Life Insurance Gap Survey mentioned above, most Gen Xers have a few misconceptions about life insurance. Let’s clear a few of those up.

Misconception #1: Insurance Costs Too Much

Most Gen Xers overestimate the cost of life insurance by 116 percent.

Yes, you may pay higher premiums than Millennials in their 20s or 30s, but the actual cost per month for life insurance doesn’t increase drastically until you reach 60 to 65 years old.

Misconception #2: My Employer Has it Covered

Generation Xers also tend to think company-paid group policies provide enough coverage for all the possible expenditures their survivors would face.

Life insurance through employers is a great option — and sometimes it’s free for employees — but when you leave the company, you lose the coverage.

According to The Job Network, the average Gen X employee hops from job to job every 5.4 years.

Types of Life Insurance for Generation X

They may not be as young as the Millennials who qualify for the very best term life rates, but Gen Xers can still get cost-efficient life insurance.

A bounty of life insurance companies offer a multitude of policies. Here’s a brief breakdown:

  • Term Life Insurance: Term life covers you for a specific period of time — usually 10, 20, or 30 years. When the term expires, your coverage ends, and you’d need to renew your policy at a higher rate, convert your coverage to whole life, or get a new policy. If you outlive your term — and here’s to hoping you do — the insurer keeps the money you’d paid in premiums (unless you bought a return-of-premium rider).
  • Whole Life Insurance: Whole life (also called permanent life insurance) does not expire as long as you keep paying the premiums. Whole life also accrues its own cash value over time, unlike term coverage. Later in life, you could borrow against your policy’s cash value or surrender your policy and claim the money. Some people even donate their whole life policy to a charity when they no longer need it.
  • Burial or Final Expense: We call this coverage “last resort insurance” for a reason. Insurers don’t ask for much health information, so just about anybody can get burial insurance coverage. But these policies cost a lot more, and they offer less coverage. They’re best for older people who want to cover funeral and other final expenses, which average about $10,000.
  • Employer-Provided: Employee benefits often include group life insurance. This kind of coverage doesn’t provide a large lump-sum payout like whole or term, but it’s convenient and easy to opt-in. When you change jobs, you’ll lose the coverage.

Life Insurance Hacks for Generation X

We all love life hacks. Pinterest is full of ideas ranging from home organization to time management. Life Insurance can also be “hacked,” cutting your spending nearly in half.

Here are a couple of our favorite life insurance hacks:

Life Insurance Laddering

You can “ladder” separate life insurance policies to make your coverage more flexible and affordable. This method may seem complex at first, but it’s not difficult to arrange.

Here’s how it works: You buy multiple life insurance policies, all with different end dates. For example, you could buy a 10-year policy, a 20-year policy, and a 30-year policy.

To keep things simple, let’s say all three policies have $250,000 each in coverage, which means you’d start out with $750,000 in coverage.

After the first 10 years, your 10-year policy would expire, lowering your overall coverage amount to $500,000. Then, after 10 more years, your 20-year policy would expire, lowering your coverage to $250,000 for the last 10 years.

Laddering helps you save money in two ways:

  • Locked-in Premiums: Life insurance premiums are lower when you’re younger. Laddering lets you lock in the lower rates you can get at your current age, which saves a ton compared to buying new insurance in 10 or 20 years.
  • Diminishing Coverage: In 20 years, when the kids are grown and the house is paid off, you probably won’t need $750,000 in coverage. Laddering lets your coverage gradually diminish, lowering your premiums along the way, rather than continuing to pay for coverage you don’t need.

Add-on Riders for Generation X

Not only can you ladder policies, you can also add riders to customize your coverage for you and your family.

Some riders may add cost to your premiums, but others come along with your policy at no extra charge.

Here are a few options perfect for a Gen Xer:

  • Disability Waiver of Premium Rider: This rider lets you keep your coverage even if you become disabled, can’t work, and can’t afford to pay the premiums for a while.
  • Accelerated Death Benefit Rider: If you become terminally ill, you could access your policy’s death benefit early — while you’re still alive — to help pay medical bills.
  • Child Rider: This rider allows you to add a death benefit for a dependent or child to pay for funeral expenses.
  • Long Term Care Rider: If you needed long term care, this rider could apply part of your policy’s death benefit to pay for a nursing home, private nurse, or any other long term care needs.

Life Insurance for the Not-So-Old

Gen Xers can feel too young to be old and too old to be young.

If you’re a member of this in-between generation, you’ve still got plenty of time to gain an affordable insurance policy to cover you and your family’s needs.

There are lots of options out there. You can even shop around and compare life insurance rates online from the comfort of your own home. Each company has its own criteria, price point, and application process. So get started today!

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