While it may seem like an undue expense for some, there are many reasons to consider life insurance. Protecting a family’s future income, covering debt left behind, and building cash value that can be used later are just a few of the reasons life insurance could be a good idea.
Single Individuals and Dependents
If you’re a single individual with no dependents and no debt, you aren’t likely to need life insurance for the death benefit. However, life insurance could still be used as an investment vehicle that will cover future debts. Mature children caring for elderly parents may want to purchase life insurance so their parents are cared for in the event the child dies before the parent. Rates do tend to be lower for younger individuals, but you should weigh the pros and cons of purchasing insurance early versus investing your money in other avenues during the earlier years of your life.
Single parents should, of course, seriously consider the need for life insurance. If a parent were to die, the caregiver would have financial needs, both immediate and future. Life insurance would ensure both your child’s current needs as well as future needs, such as college tuition.
Married Individuals, With or Without Children
Married individuals need to assess the levels of income entering the household. If both individuals work and bring in relatively equal pay, each should theoretically be able to survive on her own income. You’ll need to assess your debt levels in order to make a fair determination. Your spouse will suddenly be alone in handling mortgage payments, revolving debt payments, and even the costs of a funeral. You may find a small amount of life insurance is necessary to ensure a sustainable quality of life.
Married couples with children have a much greater risk to consider. Even if both spouses work, the financial blueprint of the household would change dramatically if one were to die. The surviving parent would be forced to add child care expenses to the budget and would have to find a way to pay for all of the expenses that were once shared on his or her own. In households where only one spouse was working, the surviving spouse will likely experience a gap with no income as he or she works to find employment.
This doesn’t mean you need to purchase a policy capable of covering your family’s needs 100% for life. You will have to carefully consider how long it would take your surviving spouse to regain financial control – whether that means going back to school to train for a higher paying job, selling your family’s assets, or simply making sure your older children are able to finish college.
Mature & Retired Adults
Whether you’ve decided to work into your golden years or have decided to live off of your pension, the older you are the more significant your need for at least a little bit of life insurance. Individuals who have accumulated significant assets, or who have pensions, will have those things to leave a surviving spouse. You’ll need to calculate what your spouse would be left with and how much she would need to make up the difference in order to survive in the event of your death. You won’t need to purchase as much life insurance, but you may find waiting until retirement results in higher premium rates.
Life insurance is definitely a necessity, but that level of necessity changes throughout your life. Talk to your spouse, think about your dependents, and get in touch with your insurance professional to decide what policy type you need and how much coverage you should purchase. It’s never too early to plan for your family’s future.