There is a misconception that the only people who need life insurance are those in high-risk careers or those near the end of their lives. In reality, the net is much wider than you may think.
Perhaps you’ve wondered, “what age do I need life insurance?” or “do I need life insurance if I have no dependents?” We wanted to take a deep dive into these answers so you can make the best decision for yourself and your family.
To discover if you qualify for life insurance and what the right plan is for you, read on!
How Do I Know if I Need Life Insurance?
Before we answer this question, it’s important to unpack what life insurance is.
Life insurance is a contractual agreement between you, the policyholder, and the insurance company, where in exchange for a monthly insurance premium, your insurance company will cover expenses in the event of your death. This can include death benefits and can safeguard your family from financial ruin.
Your loved ones or those listed as the beneficiaries will receive payment to help cover your funeral costs or money to go towards future living expenses and other unexpected bills.
If you have people in your life who would be financially impacted in the event of your death, then life insurance would be a great option for you and your family’s future. You can also add extra coverage for things like critical illness, or if you become permanently disabled because of an illness or injury, onto your policy so that you will be able to continue to support yourself and your family (you can click here to learn about help that is available for achieving a successful claim, should you ever need to).
When Should You Get Life Insurance?
Most of us avoid planning for the end of our lives. It’s a thought that can be too scary to entertain, but to create the best outcome for our spouse, family members, and children, one should prepare for this unavoidable aspect of life.
What Circumstances Are Necessary for Life Insurance?
Read on to find out common circumstances that could persuade you to get life insurance.
- You Have Debt: If your leftover assets surpass that of your debt, then your loved ones could be held liable after your death. For instance, if your spouse co-signed a loan for you then they may have to pay that money back.
- Your Partner Depends on Your Income: If you are the sole provider for your family, life insurance provides a cushion for your spouse’s living expenses.
- Your Funeral Would Cause Financial Hardship: Funeral costs can run anywhere from $6,000 to $14,000, depending on your state. To ease the financial burden, consider getting life insurance.
- You Own Expensive Estates: To transfer your estate to loved ones after your death, some states charge an estate tax. If you own a large estate, life insurance could be right for you.
What Kind of Life Insurance Is Best For You?
Life insurance is most commonly available in two types of forms:
- Term life insurance protects you for a specific amount of years.
- Whole life insurance is permanent insurance that lasts your whole life.
Whole life insurance tends to be more expensive than term life but does provide a few benefits. For instance, whole life insurance allows you to borrow against its cash value while you are still alive if you need cash fast. Life insurance companies do charge interest on this loan, however, permanent policies are the only type of plans that allow you to borrow against the death benefit.
On the other hand, term life insurance supplies a death benefit to your beneficiary in the event you pass away. This could cover funeral costs and allow your loved ones time to focus their attention away from financial stressors and on to more important matters. Each insurance should be chosen carefully and depends on a variety of factors, including your income, health, assets, and age.
Final Thoughts
It’s important to understand who needs to get insurance, as its benefits can lessen the financial burden left on your loved ones. No one can control when they pass away, but ensuring your loved ones are taken care of is an important responsibility.
If you are ready to cash in your life insurance policy or want more information, visit the Coventry Direct website, and don’t downplay the value of a life insurance policy today.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin