Many millennial parents are taking a massive financial risk, according to a new study from Haven Life Insurance.
Millennial parents of children ages 5 and under “are highly invested in their kids’ lives and well-being, yet ill-prepared to deal with the financial realities of their future,” the study found.
Haven Life’s study — which is based on a recent poll of more than 500 millennial parents — reveals that many young adults are severely underinsured in life insurance, if they’re insured at all.
An alarming 20 percent of millennial parents say they have no life insurance at all, according to the study. And 70 percent of those with insurance have less than $250,000 in coverage, which Haven Life says is woefully inadequate should the unexpected and unfortunate occur. According to a Haven Life press release:
With an average household income of $81,165, many experts would recommend at least $400,000 in life insurance coverage.
In addition to a lack of sufficient life insurance coverage, many millennial moms and dads also have an equally depressing balance on their savings.
More than half (53 percent) of those polled report having less than $5,000 in savings while 34 percent have $1,000 or less socked away.
Millennial parents with children ages 5 and younger are spending $10,000 or more annually on child care, which is about 12 percent of their income, says Haven Life. Housing costs take up another 30 percent of their income. Those factors contribute to why their savings and life insurance coverage aren’t where they need to be.
Why millennials should buy life insurance now
If you’re a millennial lacking life insurance or want to bump up your coverage, the right time is now. As Money Talks News contributor Colleen Sparks has written:
In general, the sooner you get a life insurance policy, the less expensive it’s likely to be. That makes sense, since insurance companies charge premiums according to the risk that the insured will die. You may find that getting a policy later in life can get prohibitively expensive, especially if you have major health problems such as obesity or cancer.
Check out “How to Land the Right Life Insurance Policy” for finding a policy and coverage that works for you.
Are you surprised at millennial parents’ expenses or lack of insurance coverage? Sound off below or on Facebook.