News and Commentary

UPDATED You Are Not Too Young To Think About Life Insurance by Scott Montgomery

Death is often the furthest thing on the minds of twenty-somethings who are just beginning their careers and enjoying the freedom and opportunities that come with their post-college life. However, introductions into adulthood also come with a long list of responsibilities, liabilities and risks that require carefully consideration and planning.

In the unfortunate and tragic event that a millennial with student debt or other loan obligations has an accident and passes away, the responsibility for making payments of those loans may fall to that individual’s parents or other loan co-signers. While state law requires that the assets of a single individual without children pass to his or her parents, it is unlikely that a twenty-something’s savings will cover this outstanding loan balance. Rather than risking the transfer of this burden to one’s parents, consideration should be given to securing a life insurance policy that covers the amount of the debt. Often, these policies can be secured through one’s employer and the cost of premiums when the policy holder is young and healthy are affordable. Alternatively, the parents of millennials may consider buying policies insuring their children, who may take over premium payment when their earnings rise in the future and leave behind a death benefit for their future spouse and children. After all, life insurance policies become more important as individuals get married and start having children who rely on the policy holder for their livelihood and long-term care. For example, the proceeds from a life insurance policy may help to pay the mortgage and allow surviving family members to remain in their homes after the death of a breadwinner. Those proceeds may also pay for a child’s college education, pay off burdensome debt, support a surviving spouse’s retirement or simply provide loved ones with the gift of financial flexibility.

When a named beneficiary receives the proceeds from a life insurance policy, those proceeds are not subject to federal income taxes. However, it is possible for those proceeds to be subject to federal estate taxes when a decedent’s estate is valued above the lifetime exclusion amount of $12,060,000 for estates of decedents who died in 2022 ($24,120,000 for married couples filing joint tax returns) or $12,920,000 in 2023 ($25,840,000 for married couples filing jointly). One way to avoid this scenario and exclude life insurance proceeds from one’s taxable estate is to structure a policy as part of an irrevocable life insurance trust, in which the trust owns the policy and makes premium payments on behalf of the insured for the benefit of a named beneficiary.

As you age, your life insurance needs may change. For example, the amount of a death benefit may need to increase depending on your current stage of life and financial responsibilities to family members and even business partners and employees. While life insurance may not be a top-priority for most millennials, it can be an important and often affordable component of a well-thought-out estate plan, which puts individuals in control of their finances during life and after death.

About the Author: Scott Montgomery is a director with Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs, and a registered representative with Raymond James Financial Services.  For more information, call (954) 712-8888 or email

Provenance Wealth Advisors (PWA), 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Scott Montgomery is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors + CPAs. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Investments mentioned may not be suitable for all investors. Life insurance and long-term care insurance policies have exclusions and/or limitations. The cost and availability of life insurance and long-term care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of life insurance and long-term care insurance. Life insurance policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company.

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Updated on October 27, 2022