One of the things that many people put off when it comes to protecting their family finances is buying life insurance. There are many reasons that people don’t buy life insurance, from thinking that they don’t need it, to the belief that it is too expensive.
The reality, though, is that you do need life insurance — and it’s really not all that expensive, as long as you choose term life insurance.
Life Insurance Protects Your Family
The point of life insurance is to protect your family from financial disasters. You insure your life, and if something unexpected and tragic happens, the pay out should help your family achieve some semblance of financial freedom. Life insurance is one way that you can show your love to your family, and protect them even after you pass on.
Life insurance is about more than just replacing your job; it’s about providing a future. Your life insurance can help your dependents pay for college, as well as see that your family is debt free. The insurance policy on my husband is enough to pay off the student loans and the car loans, and leave some for my son’s college education. The life insurance policy covering me (I’m the primary breadwinner) is enough to do that, plus pay off the mortgage on the house.
It’s important to consider the impact your death would have on your family, and make sure that you have enough life insurance to cover the costs associated with their lives after you are gone. When you know that your family is taken care of, you have better peace of mind.
Who Should Be Covered By Life Insurance?
Basically, if you have people depending on you for their financial well-being, or if you know that you will at some point have those depending on you, it’s a good idea to buy life insurance.
Many people mistakenly believe that they don’t need life insurance if they are young and single. However, the truth is that this is a good time to get life insurance. Premiums are lower when you are younger, so you can lock in a good, low rate for 20 or 30 years now, and when you do have a family, you’ll already be covered, and you won’t be scrambling.
Another issue is that many people think that they don’t need life insurance in retirement. However, you need to look at what your partner will receive if you pass on. Annuities, pensions, and other retirement vehicles might offer reduced pay outs to partners of the deceased. Consider your partner’s likely needs if you pass on — along with a portion of the income you offer.
Finally, don’t think that just because you are a stay at home parent that you don’t need life insurance. Even if you aren’t earning money, your contributions are still important. How much would your partner have to pay for the things you do? Child care is the biggest expense, but what about housecleaning and cooking? Without a partner to do these things, the cost of running the household goes up. Keep that in mind as you purchase life insurance.