Life will be full of twists, turns and unexpected events, so there are countless reasons to buy life insurance. But how do you know if you need it?
To assess your needs, ask yourself these questions:
How old are you?
If you’re young and in good health, now is the best time to buy life insurance. Even if you’re not ready for a family, life insurance will be the cheapest at this stage of your life and you will be able to lock in a good rate.
If you’re approaching middle age, have a dangerous career, are not in the best of health, or have family members who still depend on you financially, your need for life insurance is much greater.
If you’re retired or getting up there in age, and no longer have any dependents, you may not need as much life insurance. A small policy that covers basic funeral expenses should be enough.
Is there anyone who depends on you for financial support?
If you have children and you are the primary earner of income, life insurance is the key to making sure your family has the resources they need to carry on if anything should happen to you. Think about how much money your family would need for living expenses or to continue supporting a dependent family member.
If you have no dependents, you may be able to go without life insurance altogether or buy a small policy to cover any unpaid debts and funeral expenses.
Do you have debt?
Even if you’re single and have no dependents, buying life insurance is a wise move if you have debt. Your co-signer or second card holder may be responsible for paying what you owe on any medical bills, credit cards, loans, etc. so take this into consideration when purchasing your life insurance policy.
What kind of funeral do you want?
If you have specifics in mind for your funeral like a certain type of casket, headstone, mausoleum, etc. make sure to buy an insurance policy large enough to cover the expected burial expenses.
After asking yourself these questions, if you’ve determined you should have life insurance, the next step is to figure out which type is right for you and how much coverage you should get.
The two types of life insurance are Term life and Whole life.
Whole life covers you for your entire life and accrues cash value over time. With Whole life insurance, you will have an option to cash in the policy later in life, instead of receiving a death benefit.
Term life covers you for a certain period of time and is less expensive than Whole life insurance. Term policies do not have any cash value. Only if you die within the covered term, will your beneficiaries receive the death benefit.
Life insurance can assist with a variety of needs, including ongoing care for a special-needs child or elderly parent, or providing income replacement so your family can continue to pay everyday living expenses.