Do Millennials Need Life Insurance?

03/17/2015 08:30 pm ET | Updated May 17, 2015

If you're like many millennials, you might see mastering the basics of adulthood -- such as establishing your career -- as a much higher priority than signing up for extra insurance. But some say that even though Americans in their 20s and 30s are delaying buying homes and starting families, life insurance should still be a consideration -- just for different reasons.

"I do not talk about continuation of funds or the protection of the family upon death with young people, because no one wants to be the dead person at 18 to 29," says Chris Michaut of Jeff Williamson Insurance in Lebanon, Ohio. "Life insurance, as I explain it to young individuals, is about your legacy."

Many young, unmarried people have no need for life insurance. However, there are some cases in which single millennials should have a policy in place.

Protecting family members against debt

Student loans and other debt are one of the biggest reasons millennials should purchase life insurance -- and they're becoming a bigger reason all the time.

"Young adults are accumulating larger amounts of debt quicker than ever before," says Raphael Locsin of Shift Insurance Services in Lakewood, Calif. "They can purchase life insurance so that this debt will not be passed on to family members."

That can happen when your debt is in a joint account or has been co-signed by a parent or someone else.

Student loans are the biggest culprit when it comes to millennial debt. Among those who took out loans, the average student graduating with a bachelor's degree in 2014 owed about $33,000 in student loans -- almost twice the average debt burden of graduates 20 years ago, according to the Wall Street Journal. More than 70 percent of college students will graduate with student loan debt.

According to the Experian credit reporting bureau, the average millennial also carries about $2,600 in credit card balances.

Government student loans are discharged if the student dies, but private ones may not be. And in a 2014 survey, Experian found that two-thirds of millennials had used a co-signer -- which makes that person liable for any shared private debt you can't pay. A life insurance policy is a smart move if anyone has done you this favor.

Covering end-of-life expenses

Though it's not fun to think about, anyone can encounter major end-of-life expenses. Even a previously healthy 25-year-old can rack up hundreds of thousands of dollars in medical bills. If a friend or family member officially agrees to help pay for your treatment, you may pass the debt on.

And then there are funeral expenses. The average funeral costs $6,600, which is well over the average family's means, Michaut says. "Would you want to be remembered as a brass can and ash?" he says.

If you're not picky about your funeral arrangements, it may not be a good enough reason to buy life insurance. But anyone with helpful friends or relatives can create -- and leave behind -- significant medical debt.

Locking in a low price

Signing up for life insurance early could mean the difference between affordable premiums and unaffordable ones -- or between having coverage and not having coverage.

Jerry Becerra, of Barbary Insurance in San Francisco, says life insurance for young people is all about thinking ahead: "Life insurance premiums are based largely on the age and health of the individual, and so the cost of coverage increases over time as we all age."

CNN finds that life insurance costs can nearly double for those who wait 10 years to buy a policy -- and that's assuming everyone's healthy.

"Our health may be unpredictable," Becerra adds.

While it's virtually guaranteed that coverage will become more expensive the longer you wait to buy a policy, you're also leaving it up to chance whether you'll qualify for insurance at all. Serious health problems can make even a young person uninsurable. On the other hand, signing up for a level-term policy at a young age locks in low rates, and the right one can guarantee access to renewal or whole life insurance in the future.

The bottom line

There are other reasons millennials might decide to buy life insurance. You can make a charity the beneficiary, for example, or a friend or family member who could use help with bills.

"Being insured may give business partners the comfort they need to work with you. It can also make obtaining credit easier as the loan can be protected by life insurance coverage," Becerra adds.

It's also possible that none of these scenarios apply to you. If you're unmarried with no children and are financially independent, you may well not need a policy. But buying sooner than later does have advantages. To qualify for the best rates, get a policy as soon as you have a need for one.