Why Do I Need Life Insurance?

Why Do I Need Life Insurance?

Thinking about life insurance can be unnerving since many people associate estate planning with death. It is a difficult topic to think about because it is the only thing in life that is guaranteed, yet people do not want to think about the prospect of dying. Some people also believe that they are too young or healthy to die, so they feel they have the time to put it off. Waiting to buy life insurance also often leaves family members in financial ruin after an unexpected loss occurs.

After a death occurs, there will be immediate financial obligations such as funeral costs, estate debts, and childcare. Dealing with the aftermath of death can also have devastating effects on a spouse when trying to overcome these obstacles. It is an overwhelming process when left without financial stability, so peace of mind not only affects you but your family left behind.
1. Funeral Costs
Did you know that the average cost of a funeral in the United States is more than $11,000 ? Once death occurs, families must pay businesses associated with burial including transportation to the funeral home and cemetery, embalming, funeral home attendants, memorial leaflet printing, the burial plot, florists, and gravestone fees.
2. Estate Debt
Were you aware that when spouses die, unscrupulous people will take advantage with claims of unpaid debts? If you have not planned for a death with a spouse, who is to say what one owes? Grief is a tragedy that becomes even more difficult to bear when someone must deal with financial insecurities. The most critical thing you can do before death is to identify assets, financial obligations, and any paperwork that relates to them. Keeping them in one place with precise, up-to-date estate instructions will help greatly.
3. Childcare Expenses
According to research , raising one child until the age of eighteen costs $233,610. Add to that the cost of a four-year university degree, you can understand how difficult it will be for a parent without financial support. The last thing a spouse needs to worry about is how to pay for a child’s needs when also grieving for the loss of a loved one.

At what age should I buy life insurance?

The general rule is that the younger and healthier you are, the cheaper your premiums will be which means you do not need to have
a family to benefit from life insurance. The first thing you need to do is figure out why you need a life insurance policy.
1. How old are you?
For younger adults, the primary benefit of life insurance is the ability to pay for funeral expenses. Likewise, a younger adult may want to secure a parent’s elderly care should anything happen. Even without dependents, you will leave the resources to pay for funeral costs, protect your assets, or pay for medical bills that may result after death.

Buying life insurance earlier in life also helps reduce the cost of policies after aging. Moreover, waiting until a later stage in life increases the odds of medical issues which may lead to a denial of insurance if found to be at risk after a mandatory medical exam.
2. Which stage of life are you in?
You should consider your life stage as a critical factor when deciding on the right time to buy a policy. If you are considering starting a family, are newly married, or have dependents, it is always a good idea to plan for their futures. What is the cost of losing the primary financial supporter? What is the cost to replace a person who works at home?

You should also think about life insurance for business necessities. Would your business fail if you or a partner were no longer involved? Do you have employees who depend on your financial support? Obtaining policies for business partners will stabilize your obligations should an unexpected death occur.
3. What is your current financial situation?
Your current financial situation is also an essential issue because you do not want to buy expensive policies for the future if it brings you economic woes in the present. A rule of thumb to live by is to only spend about five percent of your gross income on a policy.

That said, you need to think about your financial obligations to choose a policy that covers your anticipated debts. There are many affordable policies that will provide financial stability for your loved ones while also easily covering your premiums now.
4. Why do you want life insurance?
Some people get life insurance as a benefit through employers which is often not guaranteed long-term. If you lose your job, suffer a disability, or change companies, you will lose your policy. It is vital that you have a second policy not connected to work.

Do you anticipate mortgaging a home in your future? You could take out a policy that includes mortgage protection so that you will not have to take out another when the purchase takes place. In this situation, buying a life insurance policy that covers your home loan will protect your assets while also saving you money in the present.

Why Do I Need Life Insurance?

  • Life insurance is typically more expensive for men than women.
  • Age may also double or triple your premiums when deciding to wait.
  • Insurance agents generally recommend taking out policies that are seven times your annual salary. If you have additional factors like children or debt, you may want to increase the amount of your protection.
  • You should thoroughly research insurance carriers for reputation and policy requirements as you will be a policyholder for years to come.
Seeking guidance from a financial advisor is advisable since you have at your disposal professionals you understand the ins and out of life insurance and estate planning.

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