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Why Have Life Insurance?
There are many important reasons why you should have life insurance. From mortgage payments to planning for your estate, your loved ones could potentially face serious financial difficulties after you die if you don't have any form of life insurance. Learn more about the type of protection you can get from a life insurance policy.
Life Insurance Coverage Protects Against Risk
Your need for life insurance will vary depending on your age and responsibilities. However, if anyone relies on you for income or other needs, you should have a life insurance policy in place to protect them.
If any of the following circumstances apply to you, you may want to consider purchasing life insurance.
- You’re considering starting a family
- You have substantial student debt
- You’re a homeowner and have a mortgage
- You or your significant other are working and contributing to the household income
- You need to pay tuition and other educational expenses for your child or other dependent
- You’re a stay-at-home spouse or parent that provides valuable domestic services that would otherwise likely cost the family unit a lot of money
- You don't want to leave your family without the means to pay for your funeral expenses
Types of Life Insurance Policies
People buy life insurance for many different reasons. There are various different types of policies to choose from, but there are two main types of life insurance — term life and permanent life.
If your primary reasoning for purchasing life insurance is to protect the lifestyle of your family or dependents if you die, a term life insurance policy could be the type of plan you need. A term policy offers coverage for a specific period of time, or "term." If the policyholder dies during the term — and he or she has paid the premiums on time and the policy is in good standing — the beneficiaries listed in the policy will receive a death benefit.
Terms typically last between one and 30 years, and the death benefit amount can vary greatly depending on how much the policyholder wants.
A term life insurance policy is typically less expensive than permanent life insurance plans*.
If you want a policy that stays in force for your entire life and builds cash value over time, you may want to consider buying permanent life insurance policy. This type of policy has an investment component and accrues cash value. The premiums for a permanent policy may be more expensive than a term policy.
How Much Life Insurance Do You Need?
Once you’ve decided that life insurance is of considerable value to you, the next step is determining how much coverage you need. First, look at your current financial situation and figure out what your loved ones will need in the years to come.
The ideal life insurance policy will account for long term financial obligations such as paying off your mortgage or sending your children to college, and also help cover your more immediate monetary needs. The amount you take out on your policy should be enough to fill the gaps between what you already have and what your loved ones will need without your financial support.
In addition to your immediate needs, you should also take into consideration:
- Funeral and burial costs
- Any outstanding debt
- Other dependents, such as siblings, parents or grandparents who rely on your income
- Organizations and charities you'd like to leave money to
- Estate taxes
Get a Free Quote
Speak with a licensed agent by calling 800-966-7169 to find the right plan for you.
The Balance: https://www.thebalance.com/who-needs-life-insurance
The Balance: https://www.thebalance.com/choosing-term-life-insurance-low-cost
The Balance: https://www.thebalance.com/whole-life-insurance-choices
Nerd Wallet: https://www.nerdwallet.com/blog/insurance/how-much-life-insurance-do-i-need/
*Applications for insurance may be subject to acceptance by insurer. Rates and coverage amounts will depend upon the carrier selected.