Have you ever wondered, “Why do I need life insurance?” If you have family or financial responsibilities on your plate, then getting a life insurance policy is a smart move. By adding one, you’ll be able to provide protection for the people you love if something happens to you.
Keep reading to learn 5 key factors you should keep in mind when deciding about a life insurance policy!
1. Consider Whether You Have Dependents
Do you have kids or are you planning on having kids? Then life insurance will be an important investment for you and your family. You’ll be able to protect your kids if something unexpected happens to you and they need financial support.
Another consideration is how many kids you have and how old they are. If your kids are very young, you’ll want a policy that provides enough money to support them through adolescence and eventually college. Getting a life insurance policy when you’re younger is cheaper, too, so if you’re a new parent you should look into one soon.
On the other hand, if your kids are older, you might not need to weigh your kids as much when determining how much life insurance you need. Your kids may be able to reach financial independence more quickly if they are already in college or beyond. Spend some time calculating how much money your kids will need before they are financially stable as adults.
Evaluate the types of life insurance policies to determine the one that best meets your need. And consider your age, health, and financial situation as you make a determination.
2. Provide an Inheritance with a Life Insurance Policy
While homeowners insurance will cover the cost of damage to your home, life insurance can provide a security blanket for your loved ones when you pass. You want your kids or those closest to you to gain some financial security. And you’ll feel better knowing that you helped contribute to that.
You can look at a life insurance policy as a form of inheritance that you leave behind. To get started, you’ll need to name beneficiaries and determine the amounts allotted to them. Usually, beneficiaries are next of kin — but you hold the power to name them.
If you own a business, you’ll also want to state who will get possession of the business should something happen to you. Your business may be worth a considerable amount of money, so you want it in capable hands. You should talk this over with the people closest to you before putting anything in writing.
3. Life Insurance Will Cover Debts
Do you have student loan debt, mortgage, or credit card debt? And are those debts worth tens of thousands of dollars? When you have debts that you’re paying off, getting a life insurance policy is a wise decision.
While you might be paying off those debts at a steady pace right now, those debts could pose a problem for others down the road. If you die, your family will have to deal with those debts. And with other financial responsibilities, this could deal them a crushing blow.
That’s why getting a life insurance policy is a helpful decision. You don’t want your kids or spouse to be saddled with your debt, especially in a time of mourning. A good life insurance policy can cover the debt amount, as well as the cost of a funeral.
4. Different Types of Life Insurance Will Meet Your Needs
Not all life insurance plans are the same, so it’s important to determine which type is right for your needs. One of your main considerations is whether to choose term vs whole life insurance. Term life insurance tends to be cheaper, while whole life insurance is a little more complex — but it covers your whole lifetime.
Term life insurance covers you for a period of time — usually in increments of 10 years. For instance, you could get a 20-year term life insurance policy in an amount that helps cover your current income during that period of time. This is useful if you have debts that would be burdensome to your spouse or kids if you passed away unexpectedly.
With whole life insurance, the coverage applies to your lifetime. It also has the potential to grow money over time, which could be more helpful for your beneficiaries. Since the differences between the types of life insurance can seem complicated, it’s smart to talk with a life insurance expert to get the best input and pricing information.
5. Why Do I Need Life Insurance? To Feel At Ease
Ultimately, having a life insurance policy can provide a sense of comfort. You’ll feel good knowing that your loved ones are protected if something happens to you. The last thing you want to do is place an extra burden on the people you care about most.
Many factors go into determining what the right insurance policy may look like for you. You’ll want to consider your current income, whether you have kids, or whether you own a business. If you have a higher number of financial obligations, you may need to increase the amount covered within your policy.
Find the Right Policy
Are you still wondering, “Why do I need life insurance?” With a life insurance policy, you’ll gain peace of mind knowing that your family will have financial security if anything happens to you. It’s an investment you can make now that will provide a better future for those your care about later.
To get help finding the right insurance policy to meet your needs, contact our experienced team here or call/text us at (281) 487-9686.