If you have people who depend on you, purchasing a life insurance policy is often a prudent financial decision to replace lost income, cover burial expenses, pay off debt and put other protections in place in the event of your death.
At its core, the decision to buy a life insurance policy is an emotional one, as it’s difficult to think about how your loved ones will carry on without you. However, it is important to prepare for this eventuality, and make an informed decision when it comes to the policy that’s right for you. The best life insurance choice for you will depend on: why you want life insurance, what your situation is, what stage of life you are in and how old you are.
Life Insurance Policy by family situation
A life insurance representative can help explore your options, but here are a few life stages in which someone may choose to buy life insurance.
Beginning families
Since life insurance is cheaper when you are younger, many people choose to purchase life insurance when they are considering starting a family. Future children dependent on your income is a common reason for buying a policy, and the earlier you can commit to life insurance, the cheaper it will be.
Established families
The bottom line is that life insurance is beneficial for any family where one or more people are dependent on any family member. This isn’t exclusive to just people working outside the home, as people who work within the home need life insurance too. The costs of replacing someone who does domestic chores, home budgeting, childcare and more can be a significant financial burder.
Young single adults
Many people consider purchasing life insurance at a young age simply because of the lower costs associated. The older you get, the more expensive life insurance becomes. If there are problems with the life insurance medical exam, you can also risk being refused the longer that you wait.
Other considerations when purchasing life insurance at a young age include covering your funeral costs or providing support for an elderly parent or relative.
A life insurance policy can help those with mortgages or debts
A life insurance policy can be an effective way to ensure that your debts will be paid off in the event of your death. If you die with mortgage or other debts and no way for your estate to cover the costs, your assets may be used to settle these debts instead of being transferred to your intended recipients. Buying a life insurance policy that covers your mortgage debt can protect your interest and prevent having to buy extra mortgage insurance when you buy your first home.
Working couples without children
In the case of two working people without children, both people would have to consider whether or not they want life insurance. If both partners are earning an income that they feel comfortable living on alone should the other partner pass away, then life insurance would not be necessary except for covering funeral costs. In the instance that one working partner contributes more to the household and wants to leave their spouse in a better financial position, there are life insurance options like first-to-die policies. In the case of a first-to-die policy, the couple would pay for one policy and the death benefit would go to the surviving spouse in the event of the first spouse’s death.
People who have Life Insurance Policy a through work
It is recommended that people who receive a life insurance policy through work should still buy their own life insurance policy, in the event that you lose your job or decide to change jobs. Again, the older you become, the more expensive your policy will be, so it’s unwise to leave your life insurance plan in your employer’s hands. It’s best to buy a small backup policy to ensure that you are always covered.
There are many other situations in which a person may need to buy a life insurance policy. Your best bet is to go over your life circumstances and financial information with your insurance advisor to find the perfect policy for your lifestyle and family. While planning for death is not a process anyone enjoys, it’s an essential part of life and an important component of effective financial planning. Insurance agents at Harter Hill are available to review your policy options and are dedicated to guiding you to choose the best policy for your unique needs.
By Ronald C. Ciotoli of Harter/Hill Insurance.
