If you are young, healthy, and single, do you need life insurance? Maybe not, but as soon as you are in a relationship with someone else or have a child, things change. Purchasing a life insurance policy can be one of the most important things that you do for your loved ones.
Protect Your Dependents
One of the main reasons to get life insurance is to protect your dependents. If anything happens to you, a life insurance policy is one of the considerations for end of life planning and can give you peace of mind that your partner and your children will not struggle financially. In general, you will also pay less for a policy that you purchase when you are younger and healthier than if you wait.
For the Investment
Many people do not realize that a life insurance policy can also be an investment. It’s not uncommon for people to purchase a term policy since the premiums are usually much lower than they are for a permanent policy and a term policy can be purchased for a certain amount of time. A term of 20 years, for example, might be sufficient for children to grow up. However, while you may be able to renew a term policy if you decide that you want it for longer, it generally does not have value on its own besides the death benefit.
Most permanent policies, in contrast, acquire value over time. This means that later on, you may be able to sell it for a considerable amount of money. One way to do this is through a life settlement. You can review a guide that can help you choose the right company among the top ones. There are several different models for investment when you purchase a life insurance policy, so if this is one of your main concerns, be sure that you thoroughly explore your options.
Cover Lost Income
If you are the sole breadwinner or if you contribute a substantial amount of income to the family, this is important. Covering lost income is the main aim for many people who purchase a life insurance policy. In fact, one way to determine how much you need is to multiply your income by the years that you want covered. This ensures that your family will not have to live on much less if anything happens to you.
Pay Off Debt and Funeral Expenses
While debt generally does not pass to other family members, it can impact the value of your estate, so life insurance can be important for paying that off, allowing your assets to pass to beneficiaries as you intend. The payout can also take care of the cost of funeral expenses.
Cover Education and Other Expenses
Many people want to make sure that there is enough money for more than just income replacement, debt, and funeral expenses. For parents in particular, making sure that there is enough money to cover at least some of a child’s college education may be important. There may be other family expenses that you want to cover as well.
