While the young may espouse the traditional mantra “I’m young and healthy, nothing will happen to me,” recent studies indicate that couldn’t be further from the truth. Statistics show that young adults are not as invincible as they may think. Here are some important considerations:
- Despite that on average, young adults are relatively healthy, there is a high probability they will have to deal with a work-stopping injury. A 20-year-old has about a one in four chance of becoming disabled before reaching retirement and females are more likely to become disabled than males.
- More than one third of young adults who die each year are as a result of an injury-related accident. They also have the highest rate of injury-related visits to the emergency room, too. Overall, males are more likely to die from an accident—they account for approximately 64 percent of all accidental deaths each year according to the 2012 National Safety Council Injury Facts.
Financial Consequences of Remaining Uninsured
If young adults remain uninsured for life and disability insurance, they and their loved ones could be vulnerable to potentially catastrophic expenses in the event of a serious illness, injury and even death. These expenses include:
Medical expense—Basic health insurance plans are designed to cover a large portion of medical bills—usually with copays, deductibles and cost-shares passed on to families that could be expensive if there are lengthy hospital stays, multiple surgeries and specialists involved in the care.
Student and other loans—While federal student loans are canceled upon death, private loans are not. Private loans usually have a clause requiring full payment immediately upon the death of the borrower. If the borrower is unable to pay the loan, the lender will go after the co-signer to repay the remaining principal.
This may be a concern for the nearly 66 percent of bachelor’s degree recipients (and their parents or other cosigners) who borrow money for college. The average debt is $23,300 with 10 percent of graduates owing more than $54,000 and 3 percent owing more than $100,000—not including graduate school loans—according to the May 12, 2012 NYTimes.com article on ‘Degrees of Debt.’
Funeral and burials costs—Although no one wants to think about it, planning a funeral for anyone, including a young adult, can be expensive. The average family spends close to $10,000 for funeral and burial services according to statistics at Funeral-Tips.com.
Status of Young Uninsured Adults
In spite of these significant consequences, a large population of Gen Yers (ages 21 to 31) continue to remain uninsured or underinsured. According to recent studies by leading providers in the life and disability insurance marketplace:
- Half of young adults (ages 21 to 31) admit they are very concerned about their family’s financial security and are living paycheck to paycheck. However, only about half have any of their income protected with disability insurance according to a MetLife survey in 2012.
- Only 13 percent of young males ages 18 to 24, and 25 percent of those ages 25 to 34, have individual life insurance. For women the numbers are slightly higher, 20 percent and 26 percent, respectively according to a 2011 trends study by LIMRA.
While it is understandable that purchasing life and disability is not a top priority for recent graduates, the cost is a small price to pay for financial peace of mind for young adults and for their families. For example, based on recent Internet quotes, a healthy 24-year old nonsmoking male can obtain a $100,000 term life insurance policy for about $100 a year (quoted 03/2014 on Intelliquote.com) and purchase a $3,000 monthly benefit long-term disability benefit for an average of $95 a month (based on a 03/2014 average of various occupational quotes at www.disabilityquotes.com).
For a new architect as for many young adults, seeking independence, finding a suitable job and starting a successful career are definitely high priorities. Since part of adulthood is responsible financial planning, and when their parents, a spouse, or other family members have co-signed for thousands of dollars in student loans and do not have enough liquid assets to pay for medical and funeral costs (let alone daily living expenses for a disabled young adult), life and disability insurance should also be priorities. Both can be relatively easy and affordable for a healthy young adult to obtain.