A lot of people seem to have the misconception that life insurance policies are only for rich people, but nothing could be farther from the truth.
Getting life insurance is an important step to take because it will protect those who depend on you financially in the case of the most devastating outcome: your death. I know it’s a grim topic to think about, but do you know what’s worse than facing the death of a loved one? Facing the death of a loved one while struggling financially.
Life insurance will help avoid that by paying your immediate beneficiaries so they can handle expenses and replace your lost income. And don’t worry, it doesn’t cost as much as you may think. In fact, studies have found that consumers actually overestimate life insurance costs to be about thrice the amount they actually are! In reality, a person in their 30s or 40s can get a 10-year term life policy with a $500,000 payout for around $20-$25 per month. If that isn’t a bargain, I don’t know what is!
So, if you are contemplating whether or not to get a life insurance policy, here are 8 instances when getting one is a good idea!
You’re the Sole Income Earner
If you are the only one bringing income in to support household expenses, you need to get life insurance, stat. Imagine what would happen to your partner or children if you weren’t alive. How would they cope with everyday expenses like mortgage, rent, daycare, tuition, groceries, etc., and not to mention your funeral fees?
You are a Debt Co-Signer
If you have debt taken in your name, you would be responsible to pay for it, even after your death. This is generally done by distributing the money in your estate to creditors. However, if there is no more money to distribute, then creditors will have to write them off as bad debts and move on.
But if you co-signed for debt with another person (be it credit card, mortgage, or student loan), it’s not just your money and assets that are on the line. In the instance that you aren’t able to pay the loans back fully, your cosigner is 100% responsible for it in the case of your death. Life insurance is one way to take care of outstanding debt held on joint accounts.
And if you are married and live in one of the 9 community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), debt – even if it is only in your name – may still be passed on to your spouse (given that it was acquired during the period of your marriage).
You Have Aging Parents in Your Care
If you’re single, but having aging parents in your care that depend on you financially, it is a good idea to get a life insurance policy so that their monetary needs are taken care of if you aren’t around to do so anymore.
You Want Your Children to go to College
Education costs are rising at an alarming rate year by year, and there are few students who are able to graduate from college without going into debt. Many parents tend to start college funds early in their kids’ lives so that they can help their children stay debt-free and still get a college education. If you want to pay for your child’s tuition, one way to guarantee that is to get life insurance – which will kick in if needed even if you are no longer around.
You Want to Leave Your Heirs Money
Distributing assets (such as houses or cars) between multiple heirs can be tricky when considering things like value and preference, but a surefire way to ensure that everyone gets a fair and equal share is to distribute cash from a life insurance benefit. This will prevent arguments or disagreements that may arise between siblings when making decisions about what to do with an asset that has been left to more than one person. Or you could also allocate different proportions of your life insurance benefit to be distributed to different heirs if that’s what you prefer.
You Don’t Want Heirs to Pay Estate Taxes and Fees
If you are the owner of a large estate, you must know that the wealth also comes with a considerable amount of expenses such as taxes, as well as legal and administrative fees. This won’t change in the instance of your death, but pass on to your heirs. In certain instances, heirs may even be forced to sell the estate assets just so they can afford these charges.
Life insurance is one way to prevent this from happening. You can plan it in a way that your estate’s liabilities are taken care of through the life insurance benefit, and that your heirs receive exactly what you want them to.
You Have a Dependent with Special Needs
If you have a child or family member with special needs under your care, it is unlikely that they are ever going to be able to make a living for themselves. To make sure that they are taken care of in the case of your death, you can get permanent life insurance. This is a type of policy that covers your life, regardless of when you die, and also has a savings component along with the death benefit.
You Want Your Funeral Expenses Covered
Funerals cost a lot of money. A traditional funeral with a burial will clock in over $10,000 in costs. Yes, it is a tragedy that the industry makes so much profit over such a devastating event in most people’s lives, but that’s the truth. Think of what kind of funeral you would like and whether your family would be able to afford it if they didn’t have life insurance.
If you already have life insurance, make sure to review your coverage every few years or whenever a major change occurs in your life – such as marriage, childbirth, promotions, inheritance, etc. Coverage may need to increase or decrease based on different stages of life. You can use online insurance calculators or compare rates on websites that give insurance quotes to see how much coverage you may need.
Finally, remember that life insurance isn’t a luxury – it is a necessity and it is very much affordable to most of the customers who really need it.