Very common question that people have but perhaps the more accurate question is: do I need life insurance coverage now? Well, it depends.
The rule of thumb is, if you have people out there relying on you (and your income) for financial stability, consider getting life insurance. Common people think about inheriting legacies, but the truth of the matter is, that debt can be inherited as well. This becomes progressively important as you progress on in life and gain more dependents. If you die suddenly or lose the ability to work due to permanent disability (touch wood!), life insurance coverage ensures that your dependents have a source of funds to deal with outstanding debts or loss of future pay.
Having said that, if you have sufficient protection and are looking for more, some life insurance plans with a savings or investment component can likewise be used as a tool to grow your retirement funds or become a part of your legacy planning.
When should I get life insurance?
Once you have established a need for life insurance, don’t dally! As cliché as it sounds, life is unpredictable and you don’t want to be caught in a bad situation when it’s too late. There is likewise no better time than now to purchase your life insurance if you want to unlock additional savings.
First of all, it’s cheaper to get life insurance when you are younger because you tend to be healthier and are less likely to have pre-existing medical conditions. Plus, rates are set at the time of purchase and locked in throughout your policy. Should you decide to renew your policy when it ends, premiums will be based on prevailing rates at the point of renewal. Contingent upon your circumstance – for instance, if you have a young child as opposed to one that is due to enter the workforce soon – getting a policy with a longer term could make more sense instead of renewing it every few years.
Health Insurance or Life Insurance?
At the heart of it, health insurance and life insurance are both important tools that protect you from financial strain due to illnesses and other medical emergency crises. While life insurance may not essential as necessary when you are younger, you will need it eventually and if you can afford it, getting it earlier may help you save more in the long run.
Here are a few examples of those who may need life insurance:
Parents with dependents
According to the USDA, the expected cost of raising a child to age 18 is around $244,610. Having dependent children implies confronting some hefty costs, including childcare, extracurriculars, schooling, and higher education costs. When you put these costs together, along with housing and necessities, the death of a parent can leave kids at a severe disadvantage. Life insurance can help ensure that your kids will be covered during the time in their lives when they genuinely depend on you.
Couples
Couples in any phase of life may need life insurance. For example, if couples have financial responsibilities together, such as a mortgage, the impact of one person’s death could mean the other can not maintain those obligations. A life insurance policy can assist the remaining partner keep their home and lifestyle after someone dies. A life insurance payout can likewise provide a buffer for grieving loved ones. In case a surviving partner would like to take an extended work break to grieve their loss, an insurance payout can give them the breathing room to do so.
Homeowners with a mortgage
A home is typically the most valuable asset owned by American consumers. A mortgage payment can be a significant component of the household budget and an incredible burden if an income-earning loved one dies. Life insurance benefits can ensure that your beneficiaries or dependents can keep their home if you startlingly pass.
Single parents
Single parents shoulder all or most of the financial responsibility for their children. The death of a single parent can leave kids with a financially uncertain future at a time when they are already grieving a tremendous misfortune. A life insurance policy can benefit the children so they still have the opportunities you hope for them as a parent. With the right policy, college funds, school reserves, extracurriculars, or even funding to buy their first house could be conceivable.
Business owners
If you own any business, your family and business partners could likely struggle to maintain it uninterrupted in the event of your death. A life insurance coverage policy can help them cover costs to keep continuity, such as operational costs, business debts, or fees related to transferring the business to their heirs or a buyer.
