Have you been considering getting life insurance but wondering if it is worth it? Find out why it can be beneficial for you.
Life insurance is a specific type of insurance policy that pays a financial dividend to the policy beneficiary or multiple beneficiaries when you pass away. There are several types of life insurance policies and ways to obtain them. Some are obtained through brokers. You can purchase others directly. The coverage type provided by each policy varies as well. You may want a term life insurance policy that lasts for a certain length of time. Alternatively, a whole life insurance policy stays active until you pass away, provided you make the necessary payments on the policy when they are due, might be the right choice for you.
You may wonder if obtaining a life insurance policy is worth it for you. It is an additional expense, which you may wish to avoid if you are on a tight budget. There is no simple answer to that questing. How much life insurance benefits you and your loved ones depends largely on your specific circumstances. You must examine aspects of your lifestyle, your family unit, and other personal circumstances to make the choice in an informed way. Below are some potential reasons purchasing a life insurance policy may help you.
Replacing Your Lost Income
When considering whether to purchase life insurance, you must think about more than the emotional toll your passing may take on your loved ones. The financial toll might also be enormous. If you are the sole financial provider for your family, they may have no means to support themselves when you are gone. A life insurance policy can offset that financial loss for them, allowing them to focus solely on the recovering from your passing emotionally.
Securing the Future of Your Baby
Parenthood changes people in many ways. For example, life insurance may not even cross your mind until you are expecting a child. Yet, it may become a top priority as soon as you get the news that you are expecting. A life insurance policy that lists your child as the beneficiary can secure his or her financial future after you are gone. It might cover the costs of education or day-to-day living expenses so the child can keep the family home when you pass away.
Ensuring Financial Security After a Marriage
If you get married, making sure you and your spouse are financially secure is sure to be a top priority. You can obtain separate life insurance policies that pay out to the surviving spouse when one of you passes away. Alternatively, you can obtain a joint policy. Such a policy pays out either after one of you dies or after both of you die. In the latter case, the amount of the policy is given to your recorded beneficiaries, such as your children. If you are in a long-term relationship but not married, you may still apply for life insurance to assist your spouse or children.
Keeping Other Beneficiaries Financially Stable
When you take out a life insurance policy, you can name anyone you wish as your beneficiary. You may have people for whom you feel financially responsible besides your spouse or children, such as your parents or siblings. It is also possible you might have a close friend or business partner you want to help financially in the event of your passing. In any case, keeping other beneficiaries financially stable after you die is another good reason to get a life insurance policy.
Compensating for Your High-Risk Job
If you are under the age of 30, or even 40 you may feel you are too young to need life insurance. However, that is not necessarily true. The fact is anyone can pass away at any time. If you are relatively young but have a high-risk job, it may be particularly prudent to apply for life insurance now. It can provide your loved ones with peace of mind but expect to pay more for your policy than a person with a low-risk job pays. Examples of such jobs include:
Emergency Response or Healthcare Worker
Compensating for Your High-Risk Hobby
As is the case with a high-risk job, you must typically pay more for life insurance when you have a high-risk hobby. Yet, it is important to get an insurance policy as quickly as possible. That way your family can receive benefits if you pass away in the pursuit of your passion. High-risk hobbies include:
Keeping Your Financial Debts Your Own
If you are like many other people, you have accrued certain financial debts during your lifetime. One possibility is you may have student loans left to pay off. You might also have a mortgage to pay. Debts come in many other forms as well, such as credit card debt or medical bills. Whatever forms your debt takes, your loved ones may have to repay them after you pass away. A life insurance policy provides cash to loved ones, so they are safe from that added financial burden.
Covering Burial Costs
Burial expenses can place an enormous financial strain on a family. Even the simplest burial plans often cost thousands of dollars. That is an expense your family may not have the means to afford. It is also an expense your bereaved loved ones may not feel emotionally ready to confront when you pass away. Purchasing a life insurance policy now prevents them from needing to deal with that expense down the line.
Weigh Your Life Insurance Options Carefully
If the reasons listed above have convinced you to get life insurance, the next step is to shop around for the best policy. Take the time to weigh your options. If you have a spouse, the two of you must discuss those options together. Also, consider the timing. For example, some life insurance companies require you to pass a physical before qualifying. Therefore, it might make sense to postpone applying if you are dealing with a temporary medical condition. You may also benefit from speaking to a financial advisor who understands the nuances of life insurance before finalizing your policy purchase.