Nobody likes to think about their mortality. However, there are certain approaches you can take while living to ensure your loved ones are protected once you’re gone. One such approach is taking out a life insurance policy.
When you consider life and what lies beyond, it’s inevitable to wonder what will happen to those left behind. After all, your loved ones might become financially responsible for outstanding debts or expenses you had before passing away. These expenses can include everything from medical bills to childcare costs to your mortgage.
What if you have been wise with your finances and don’t have any outstanding debts? In this case, you could simply wish to leave your loved ones with financial comfort after your passing. You may even just hope all of your funeral costs are covered.
Either way, there are various reasons why it’s recommended you invest in life insurance.
Are you eligible for life insurance?
Before getting onto the reasons to invest in life insurance, you may be wondering if you’re even eligible to acquire a life insurance policy.
It’s true that the healthier and younger you are, the less you are likely to be spending on premiums. You are also opening the door to policies that provide greater financial benefits and coverage. With that said, many people are still eligible for life insurance – even if they’re older and not in the best health.
For instance, you can even get life insurance without an exam. This means if you’re physically incapable of receiving a medical examination, you can still potentially gain the coverage you desire. In addition, there are other insurance options available for those suffering from multiple health issues.
Is life insurance necessary?
It’s true: some people don’t need to think about life insurance. One way to see if you fall into this category is to analyze your current financial situation.
Say you already have a significant amount of savings in the bank. In addition to this, you have various saleable assets – from your home and vehicle to smaller possessions – that will generate a tidy amount of money. Oh, and your financial obligations are minimal as you’ve already paid the mortgage and have no outstanding credit card debt.
When presented with a situation like the above, taking out life insurance may be deemed an unnecessary expense. This is despite the fact that even modest funerals can be a costly event.
However, it is easy to overlook various expenses which a loved one might have to take on should you pass away. Contractual expenses involved with running your home, for instance, can quickly become a financial burden. If you have children that are dependent on you, this responsibility – and the costs it involves raising them – will also fall on your loved ones.
Do you have minimal-to-no provision for your family once you die? If so, life insurance should be seriously considered.
The reasons to buy life insurance
Are you still on the fence about getting life insurance? Well, to help you come to a decision, below are some of the main reasons why people opt to invest in life insurance:
Purchasing a new home
When you commit to a mortgage, you will have every intention of paying it off completely. However, you never know what can happen in life, and the responsibility of repayments will move onto someone you love should the worst happen.
Rather than letting someone you care for deal with the financial commitment of a mortgage, a life insurance payout can cover the debt.
When someone is dealing with a mortgage or a different type of sizeable debt, one type of cover which can be suitable is decreasing term life insurance. The longer this coverage remains in the place, the less total sum is paid out by the insurer. The reason for this is simple: your debts are naturally decreasing the longer you spend time paying them, and the insurance is only there to cover any outstanding payments. Due to the nature of the insurance, monthly premiums tend to be lower.
Level-term life insurance, however, could be a better fit if you possess an interest-only mortgage. This form of insurance means the payout amount is fixed for a pre-determined length of time. The benefit of this coverage is that your family will receive the same overall payout whether you died six months into the policy or six months prior to it expiring.
Having a baby
As any parents will tell you, children are expensive – and that’s before you think of putting together a college fund. Yet if the unexpected were to happen, it is your loved ones that would have to fill the gap both emotionally and financially.
With life insurance, you could have a plan that pays out should you pass away before your child reaches maturity. This can give you peace of mind while also allowing you to enjoy the present with them in full.
Planning a funeral
Did you know in the US, the average cost of a funeral ranges from $7,000 to $12,000? Due to the large financial commitment required, you don’t want this unexpected bill to impact those you love. With the right life insurance coverage, however, this can prevent your family from going into debt simply due to dealing with your funeral.
There are policies available that provide significantly lower payouts than others but big enough to pay for a funeral. The terms for this insurance type won’t have a fixed length – so it exists until you pass away – and contributions are often low.
When you’re getting married and joining families, it’s unlikely you are thinking about what will happen if one of you were to die. However, life insurance is one way to ensure your partner’s financial wellbeing is covered should you depart.
While you may decide to take out a single insurance policy, there are also joint policies available that cover both of you – and is typically cheaper than going with two individual policies.
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