You might wonder whether to buy life insurance or not. Do you need death coverage, or is it just an additional expense?
You might think you don’t need life insurance if you do not have children. But that is not always the case. If someone depends on you financially, then you definitely need life insurance. This could be anyone in your life who will have financial trouble in the event of your premature death. It could be your spouse, kids or aging parents.
Life insurance can prove valuable to people in any of the following scenarios:
You Are Single: Yes, contrary to what people think, singles may also need life insurance, depending on their life stories and struggles. Many singles provide financial support to their parents and siblings who might have special needs. Even if they don’t have financial responsibility to anyone in particular, what happens if they carry a lot of debt? In the event of their death, that debt will pass to their family. Life insurance can avert this problem.
Life insurance can also help you make the world a better place. Do you want to leave this world with something good when you die? Are you passionate about helping others and funding charities? Life insurance makes it possible for you to leave a substantial legacy to the charities of your choice for just the cost of your premiums.
Buying life insurance while you are young and healthy lets you get coverage at the best rates available. Depending on the type of policy you buy, you can lock in rates for five years, ten years or even your lifetime. While rates are locked, your premiums won’t change regardless of your health condition.
You Own a Small Business: If you are a business owner or entrepreneur, life insurance can help you protect your business. In the event of your, a partner’s or a key employee’s death, what would happen to your business? Life insurance provides an acceptable solution to this problem in various ways:
- Key person life insurance: In the event of death of a key employee, key person life insurance provides funds that help the owners hire a replacement or any alternative solution.
- Buy/sell insurance: This coverage gives the other owners of the business the cash needed to buy the shares of the deceased partner on a pre-agreed price, according to a buy/sell agreement.
You Are Married: If you are married without children and think you don’t need life insurance, think again. With utility bills, car loans, mortgage or your monthly rent, credit card balances and so many other expenses, how will your spouse manage it all alone if you were to die tomorrow? Even if your spouse has a good income, monthly expenses could be a great financial burden. Life insurance can replace your lost income so your spouse can continue to live the same lifestyle.
You Are Married with Children: Having children means you have more mouths to feed. You likely want to ensure their educational future as well. But what would happen to the dreams you have for your children if you were to die suddenly? If the costs of a college education increase five percent per year, a four-year education at a private college could cost nearly $400,000 by the time a baby born this year is ready to enroll. Life insurance can make sure that your dream lives on even after your death.
You Are a Stay-at-home Parent: Don’t think that the efforts of a stay-at-home parent are easily replaceable. Cooking, cleaning, transportation, helping your kids with homework and spending quality time with them by managing their everyday routines are mostly underappreciated tasks. Even with you gone, your family will still want someone to perform these services. Life insurance provides your family a way to maintain their living standards and minimize some of the changes and stresses caused by the untimely death of a parent.
You Are a Single Parent: When you are a single parent, too much responsibility falls on your shoulders. You act as both mother and father to your children. You have to take care of them day after day and provide everything they need, from food to college tuition. What would happen to your children if you die before they’re independent?
You Have Grown-up Children: Once you are free of college expenses and mortgage payments, do you still need life insurance? Answer this question by thinking how your spouse will maintain the quality of life that you have grown accustomed to after working so hard. Would you want your spouse to struggle with financial troubles after your death?
You Are Retired: If correctly structured, your beneficiaries will receive the proceeds of a life insurance policy free of income tax. Unlike an estate, which might have to go through probate, proceeds of a life insurance policy are immediately payable. This lets your family take care of funeral and burial costs, debts and estate taxes immediately without liquidating assets.