Is Life Insurance For Me?
You likely heard your parents talking about life insurance – or perhaps your financial life has been impacted by the death of a loved one who wasn’t insured. But do you need life insurance yourself?
Look over the list below and see if any of these statements apply to you. If so, it might be time to start shopping around for the right life insurance policy.
You’re a Single Parent
As a single parent, you’re the caregiver, breadwinner, cook, chauffeur and so much more. Yet nearly four in 10 single parents have no life insurance, and many with coverage say they need more than they have. With so much responsibility resting on your shoulders, you need to make doubly sure that you have enough life insurance to safeguard your children’s financial future.
You’re a Stay-At-Home Parent
Just because you don’t earn a salary doesn’t mean you don’t make a financial contribution to your family. Childcare, transportation, cleaning cooking, and other household activities are all important tasks, the replacement value of which is often severely underestimated. With life insurance, your family can afford to make the choice that best preserves their quality of life.
You’re a Small-Business Owner
Besides taking care of your family, life insurance can also protect your business. What would happen to your business if you, one of your fellow owners or a key employee died tomorrow? Life insurance can help in a number of ways. For instance, a life insurance policy can be structured to fund a buy-sell agreement. This would ensure that the remaining business owners have the funds to buy the company interests of a deceased owner at a previously agreed upon price. That way, the owners get the business and the family gets the money. To protect a business in case of the death of a key employee, key person insurance, payable to the company, provides the owners with the financial flexibility needed to either hire a replacement or work out an alternative arrangement.
– via Life Happens
Two Groups Who Shouldn’t Ignore Life Insurance
Choosing whether or not to get life insurance is often reduced down to a single question: Do you have kids? But it’s more complicated than that! Many of us have obligations outside of children, and creating a safety net for unforeseen eventualities might be just the ticket to the peace of mind you need.
Singles without children
One of the joys of single life might be having fewer responsibilities, especially financial obligations. So it may seem logical for singles to shrug off life insurance.
But not all single people are footloose and fancy-free, Komer says.
“A lot of singles are taking care of a parent,” she says. “You see that more often, as people are living longer.”
Or, perhaps your heart belongs to a charity. Life insurance can help you leave it a legacy, Boglioli says.
“By paying a little bit each month now, you can pay significant dollars upon your death to a charity that you care about,” she says.
Life insurance also can cover your funeral costs and certain debt obligations, so loved ones will not have to pay those expenses after you’re gone.
Rothschild cites a less obvious reason for young singles to buy life insurance.
“If you’re young and healthy, you have a better likelihood of qualifying for a low rate,” he says. “It may make sense for you to lock in the premium.”
This approach makes the most sense if you expect to get married and have a family someday and want to keep costs low during those years, Rothschild says.
Retirement is the time to relax, especially if your house is paid off and both you and your spouse are set with retirement income.
But you may still need life insurance as a way to protect your heirs.
For example, a policy could provide funds for your family to pay estate taxes and other expenses associated with your death, including funeral costs.
Retirees also can use life insurance for what Boglioli characterizes as “estate equalization.” For example, imagine a situation where a small-business owner has two sons and a daughter.
“The business owner purchases a large life insurance policy to provide his daughter an equivalent share of the value of the business that will go to the boys,” she says.
Brian Madgett, a corporate vice president with New York Life, says retirees who take out life insurance can spend the money they have saved over a lifetime without feeling guilty about depriving their heirs of an inheritance.
“Life insurance gives them the freedom and peace of mind to spend all their money and enjoy their retirement, knowing that they will be leaving a legacy in the form of a tax-free death benefit,” he says.
– via Fox Business
Do you currently have a life insurance policy? What has helped you make the decision?