Who needs life insurance?


It's clear to see when you buy some insurance products. Own or lease a vehicle? Better have car insurance. Buying a house? You are going to need homeowners insurance. But life insurance coverage? When do you want life insurance?

Since a life insurance policy can provide financial reassurance for all those nearest you, people often consider life insurance coverage options when their thinking ranges from “me” to “we.” That can be when you get married and have a spouse who relies on your income, when you have children, or perhaps if you have cosigned debts that could be left to someone else to pay off should you die. Many people will fall into one or all of these scenarios at some point in life.

A life insurance policy payout can be a back-up that helps your survivors shoulder the financial burden of the death. The payout itself (known as a death benefit) is the amount of money the life insurance provider would pay your beneficiaries should you died unexpectedly. Your beneficiaries may use the policy's death benefit for a number of financial needs – to help cover funeral expenses, meet day-to-day living expenses or plan for the near future, to name a few.

Bottom line: While individual life insurance needs depend on your budget, dependents and how much your loved ones would need if you were to die, there is usually no “wrong” life stage for a lifetime insurance.

Determining if you need life insurance

The easiest method to understand whether you'll need life insurance coverage is to take a look at your current family structure and responsibilities. While coverage needs aren't one-size-fits-all, doing this can give you a much better knowledge of which life situations would take advantage of using a policy in position.

You're single

If you're single, with virtually no debts or shared expenses, then you definitely likely have no need for life insurance coverage. Most people need coverage when someone could be financially impacted by their death.

That said, if you are in your 20s and don't have emergency savings, you may want to consider your family's financial capability to afford a funeral or burial expenses. Life insurance at its core is really a way to leave an economic legacy for family – a 20-year, $100,000 term life insurance policy, which costs a 25-year-old woman in excellent health about $10 per month, could be a monetary back-up til you have more assets.

You're married

More than 1 / 2 of individuals a 2021 Haven Life study said they'd experience financial hardship if their spouse died. That's because with marriage comes shared financial responsibilities. Could your lover cover the rent or mortgage, pay cosigned debts or cover a funeral and final expenses on his or her own? If the answer is no, then investing in a life insurance policy may be the right thing to do.

You own a home

For many people, the house is one of their largest assets. When you own a home, it's important to consider what would happen to that house should you died. Could your lover manage to spend the money for mortgage? Or, would you like to leave the home to a loved one? Whatever your plans are for your household, you'll want to ensure that you took into consideration how much it would cost to purchase the rest of the mortgage balance around the home when determining just how much coverage you'll need. Your beneficiary ought to be whomever the home is going to be left to.

You're a parent

About 9,000 children are born to millennial parents every day. Being a parent is among the most rewarding and important milestones we'll ever reach in our lives. And it's a period that has substantial financial impacts.

A life insurance coverage if you have kids may help your spouse cover day-to-day bills, pay significant debts, cover childcare or send the kids to school. Within the worst-case scenario, the proceeds of the life insurance coverage help make sure your children are financially cared for if both mom and dad weren't any longer around.

You're the breadwinner

If all your family members relies on your earnings for their financial well being, you will want life insurance. Unfortunately, just about everyone has heard the heartbreaking stories of a family losing parent and not only struggling emotionally but additionally financially. Most experts recommend using a policy that's Five to ten times your annual salary. If you're the breadwinner that supports a spouse and kids, make use of a life insurance coverage calculator to help determine the right amount of coverage to safeguard all your family members.

You're a stay-at-home parent

It's a common misconception that only the salary-earning spouse needs life insurance coverage. The truth is the contributions of the stay-at-home parent count a lot more than $162,000, based on Salary.com.

Regardless of the salary of one spouse, usually both spouses need life insurance, including stay-at-home parents. Think about the cost of day care, housekeeping, meal preparation, and shopping, along with all of the a number of other required the stay-at-home parent.

Is life insurance through work adequate?

Do you'll need life insurance coverage should you already have life insurance through work? The solution to that question may be probably. That's because group life policies through work might not be sufficient coverage for which you need. For example, many group life policies are limited to a couple of times your annual income, which may 't be enough to assist cover, say, a mortgage or financially caring for children. Also, the potential downside of relying exclusively on the group policy is that the coverage usually terminates should you separate from your employer.

Term life insurance coverage has coverage terms, usually 10, 15, 20 and 30 years. For an individual having a term life insurance policy, the insurance policy pays out a death benefit if you die during the coverage term of the policy. Buying a person policy guarantees that your coverage can last for that term of the policy, so long as the fees are paid. Term life insurance is an affordable way to put coverage into place for the years you think you'll need it probably the most.

When should you get life insurance?

Rates for a term life insurance policy vary, but age and health are a couple of huge factors influencing the rate of the term life policy. This is exactly why it may be smart to purchase a life insurance policy when you're young and healthy. For instance, a 30-year-old man in excellent health can purchase a 30-year, $500,000 insurance policy for about $36 monthly. By age 35, with the same factors in position, that very same individual might have to pay $41 per month.

Because an amount term life insurance policy locks a rate into place for the duration of the term, this means that the one who purchases an insurance policy at 25 is going to be paying the same rate even past the age of 50 (on the 30-year policy), no matter what their health may seem like then.

Even though an existence insurance premium may not be expensive, it is a payment that must be paid to keep coverage. So for many people, it may not seem sensible to include that bill to their monthly budget until they've financial obligations, like a mortgage, or dependents like kids or aging parents.

To make sure you possess the correct amount of coverage, it's useful to make use of an online life insurance coverage calculator.

Buying life insurance is easier than ever

Whether you are feeling you'll need life insurance coverage now or are confident you may need life insurance down the road, the process to buy life insurance has not been simpler. You may also apply for some policies online – enabling you to fill out an application on your phone or tablet, as well as providing the opportunity to get instant rate estimates for price comparison. Familiarizing yourself with different life insurance coverage options, rates, and coverage can help you suss out the best option for you – and in some instances will help you with a faster application and coverage decision so that you can go on and live your life.