Life is a special gift, but sadly, not many get the chance to experience its true beauty as death takes them prematurely. As depressing as it sounds, death is inevitable, and there is nothing you can humanly do about it. What you can do, however, is prepare for it.
We are talking about purchasing life insurance. You probably receive calls from multiple insurance sales agents concerning the coverage or have heard people speak about it. So, do you know what life insurance is?
Well, life insurance is a policy that financially covers your dependents when you die. You are expected to contribute regular payments (premium) to an insurance company, and in return, the company agrees to pay your listed dependents a specific amount upon your death.
But do you need life insurance? Is it for everybody? To answer these two questions, let’s look at specific situations when you need this policy and when you don’t.
Generally, it makes sense to buy life insurance now if:
They could be your kids or someone’s kids that you have decided to take care of, a spouse or aging parents. If they significantly depend on your income for their day-to-day living, then you need to take up life insurance for their sake.
Not all debts are forgiven when you die. Some turn to be a financial burden for the people you leave behind. For example, a student loan cosigned by your parents leaves them responsible for the repayment upon your death. The same goes for cosigned credit card debt, mortgages, and auto loans. Consequently, buying life insurance can help settle them.
A partnership means that both parties are financially responsible for the business. To save your partner from struggling financially in case you die, you should take life insurance. It’ll keep the business going with little financial hitches.
Whether you are planning to get married in the future or to get a kid or kids, it may be wise to procure life insurance early. After all, the younger you are, the less costly the premiums are likely to be. The policy will financially secure the future of your family.
Put, the chances of dying are higher when working in a high-risk environment. We are talking about careers in the aviation, mining, oil, and firefighting sectors. You may need to pay higher premiums for such surroundings, but it is always worth it.
Paying for life insurance may be a financial burden to you at the moment if:
Are you in your early 20 and have no plans of having a family any time soon? Do you earn income but are not financially responsible for anyone? Then you may decide not to take life insurance until later. You may find it necessary to reconsider your decision; however, if you have debts or are in a partnership business.
Most people buy life insurance for their kids. So, if they grow to become self-sufficient adults, it doesn’t make sense to continue paying the premiums. But still, your children are not your only qualified beneficiaries. You may have to consider other people who rely on you financially. Normally people only get life insurance over 50 when they are looking to leave a legacy behind.
Realistically, why continue paying for a spouse that you are no longer responsible for financially? Unless you have kids who you expect to be your primary beneficiaries when you are no more, you should consider canceling the contract or changing the identity of the beneficiaries if kids are not in the picture.
At some point, you may find that you need long-term care insurance more than life insurance. That is assuming you are 65 years or above, and no one depends on you financially. So, it may be sensible to channel the money in a nursing home or an assisted living facility.
With the above quick guide, you now know if it makes financial sense to purchase life insurance now or not. Though you cannot stop death, you can ease the economic pain that comes with it by directing a lump sum payout for the people you leave behind.