Life insurance: who needs it?
Life insurance is designed to pay a lump sum of money to your dependents or heirs in the event of your death. It can help your loved ones make mortgage payments, pay bills, pay off tuition, and even cover your funeral expenses.
Many people don’t have life insurance. They may feel that they are too young, too old, too busy, or simply too uncomfortable to broach the subject.
Whether you think you need life insurance or not, it is a conversation that everyone should have. When you realize the financial hardships that your untimely death would cause the ones you love, it becomes an easy decision to make.
Who needs life insurance – and why?
Everyone is at varying life stages, making life insurance requirements different from person to person. Where do you fit in?
You’re married or in a committed relationship
You may not think you need life insurance because you have no children. But if one or both of you are covering the monthly bills, consider how the other would fare if one of you died suddenly. Would the surviving partner be able to pay off debts and cover expenses, including funeral expenses? Would he or she have the emotional wherewithal to resume full-time employment?
You and your partner are parents
If you have children, one parent may stay at home while the other works, or both parents may be working to make ends meet. If a working parent dies, would the surviving parent be able to cover costs alone? If a stay-at-home parent dies, would the other be able to cover the costs of childcare, transportation, and hiring someone to do the cleaning and cooking? Would your plans for your child(ren)’s educational future(s) be jeopardized?
You’re a single parent
Single parents have tremendous responsibility on their shoulders. With so much to think about, it is likely that life insurance is low on your list. However, when there is only one parent to care for the kids, life insurance is the best way to ensure they are protected financially in the event of your death.
Most single people haven’t given life insurance much thought because no one is depending on them financially. However, this is a great time to buy insurance because it’s cheaper and easier to get when you’re young and healthy. Also, should you die, a small policy would help your parents cover funeral costs.
You no longer have dependents or a mortgage
Your children are finished school and on their own. Perhaps you and your partner have limited financial responsibilities at this stage of your life. You do still have regular living expenses. If one of you were to die, would the other be able to maintain the lifestyle or realize the retirement dreams you’ve worked to achieve?
You own a business
Life insurance can protect your business in the event of your death or the death of a business partner. If a partner dies, insurance ensures that the remaining partners have the funds available to buy the shares of the deceased owner from the heirs. It can also enable the remaining business owners to hire a replacement to help run the company.
If all your years of working have paid off in the form of a significant estate, your death could mean that your heirs are hit with hefty estate taxes. A life insurance policy can cover them. It is payable immediately so they can take care of urgent bills without having to quickly liquidate your assets, and insurance proceeds are usually tax-free.
You may not think you need life insurance. But if you have children, a spouse or life partner, other relatives or a business partner who would experience significant financial hardship in the event of your death, then you should have life insurance.
Talk to your Western Financial Group advisor about the different types of life insurance, and what makes sense for your personal situation.