Posted By 
By Alyssa Furtado, Ratehub.ca
Special to the Financial Independence Hub
Millennials face financial insecurity through precarious work, soft wage growth, and student debt, but they do seem to be planning ahead for financial emergencies; they’re just not turning to insurance as a safety net, according to a new survey.
A poll of 1,000 Canadians by Ratehub.ca found millennials are saving an average of 35% of their pre-tax income, with 36% of respondents stating their emergency fund is a priority. By comparison, 33% of Generation Xers and 27% of Baby Boomers said an emergency fund is one of their key savings goals.
However, Canadian millennials aren’t as likely to turn to insurance as a source of emergency relief as their generational counterparts. Just 22% of millennial renters have tenant insurance (also known as contents or renter insurance), the survey found, compared to 31% of Generation Xers and 44% of Baby Boomers. Renters aren’t legally required to have tenant insurance, but many landlords will ask for proof of coverage before the lease is signed.
Tenant insurance not only helps renters protect the value of their possessions, but it can also cover the costs of repairing damage to their rental unit and the building. For example, if a renter’s toaster catches fire and causes damage to their unit and neighbouring units, tenant insurance could help cover the cost of the damages.
Millennials less likely to have health or dental coverage
Due to the fact that many millennials work part-time, are self-employed, or have contract positions, they’re also the least likely of the three generations to have extended health or dental insurance: 23% of those surveyed said they have this coverage, compared to 28% of Generation Xers and 32% of Baby Boomers. Just 12% of millennials said they’re covered in the event of a critical illness or a disability.
And a slice of the millennial cohort has no insurance at all: 15% reported they don’t have any coverage, compared to 8% of Generation Xers and 6% of Baby Boomers.
For millennials, getting the lowest rate is the most important factor in getting insurance coverage. When choosing their next insurance product, 61% of millennial respondents said getting the lowest rate was the most important factor in choosing their insurance products: more important than the ease of signing up for coverage (14%), a convenient and quick claims process (11%), high consumer ratings (6%), getting coverage from a recognized brand (5%), or having other products with the same provider (2%).
Low understanding of insurance coverage
So why aren’t millennials interested in getting insurance? One explanation could be that millennials aren’t aware of how insurance works, or how coverage could help them if emergency strikes. About 44% of millennials surveyed said they feel most Canadians only have a fair or poor understanding of their insurance coverage.
Another reason is that young people traditionally don’t think about getting insurance until they make major life changes, such as buying their first home or starting a family. Compared to previous generations, millennials are taking longer to enter the workforce, buy homes, get married, and start families, so they’ve also delayed thinking about insurance: especially if they’re focusing on building up their emergency funds instead. However, insurance can be a crucial tool in helping millennials prepare for financial disasters.
Sometimes, having an emergency fund may not be enough. Young people might assume they’re invincible, but being prepared before disaster hits is the whole point of insurance. For example, if a spouse dies or a major storm causes damage to the home, insurance can be a huge help and can protect millennials financially.
Planning ahead and having the right insurance coverage can pay off if and when an emergency strikes.
Alyssa Furtado is a passionate entrepreneur, financial expert, digital marketer and educator, and founder and CEO of Ratehub.ca, a website that compares mortgage rates, credit cards, high-interest savings accounts, chequing accounts, and insurance with the goal to empower Canadians to search smarter and save money.
