You know life insurance is a good thing to have. But do you really need life insurance?
The short answer to the “who needs life insurance” question is “pretty much everyone”. Yes, everyone can benefit some type of life insurance policy in their life. And there are a lot of benefits to having life insurance. Let’s dig into this question a bit deeper.
Most Think Life Insurance Is a Necessity But Many Go Without It
A recent statistic, 70% of Americans consider life insurance a necessity. But still 41% of us have no life insurance at all.
Why is that? Certainly cost is a big factor. Life insurance can be expensive. But it is designed to protect you and your family from financial crisis.
Yes, it can seem like you’re paying for something you won’t need right away, but think of it as saving for a rainy day. It could help pay for mortgages, for the care of a child with special needs, funeral costs and much more.
Some life insurance policies also offer cash value and tax-free investments. In the case of these policies, then life insurance is about wealth preservation and tax planning as much as the policy’s death benefit.
The Cost Factor
The reason many go without life insurance is due to its potentially high cost. Which is totally understandable. Why add additional monthly expenses on top of food, housing, medical care, utilities, transportation, etc.?
The good news is that there are very affordable life insurance policies. Some starting as low as around $25 a month. Generally term life insurance policies are going to be the lowest cost policies available. Term life may be all that’s needed in many cases. Also, check with your employer to see if they offer a group life insurance benefit. These may not pay out much but your employer may pay some or all of the cost of the premiums.
Who Needs Life Insurance?
Okay, let’s get to the original question here. The short answer, again, is everyone. However, there are certain types of people who, we’d argue, can benefit from a life insurance policy more than most…
- Primary breadwinner of the family
- Homeowners who still owe a lot on their mortgage
- Parent with a special needs child
- Stay-at-home parent
- Divorced parent
- Business owner
- People who carry a lot of debt (ie. auto loans, credit card debt, student loans)
If none of the above describes you, it doesn’t mean you shouldn’t have life insurance. But if you do fall into one or more of the above categories, you should definitely look at getting a policy.
When Should You Get Life Insurance?
The younger you are, the less you think you’ll need life insurance. However, the younger you are, the cheaper a life insurance policy will be. So the best time to shop for policies is when you’re young and healthy! Because, for most life insurance policies, your rate is locked in when you first get the policy.
So if you get a rate of $30 a month when you’re $25 on a 30 year policy, your rate will still be $30 a month when your 55! (So long as you don’t miss any payments or add top-up benefits to your policy.
How To Choose The Best Life Insurance For You
There are a lot of different factors to consider when you’re shopping for life insurance. Ask yourself these questions before you decide on which policy to get:
- Why are you getting life insurance? Is it to build wealth? Are you getting life insurance to protect your assets? Are you doing this to protect your family?
- What is your current situation right now? Are you currently employed?
- How much money can you spend on life insurance?
- Do you have dependents? Are you starting a business? Are you getting married?
- How old are you, and how long do you plan on paying for monthly premiums?
If you’re planning on getting a life insurance, be sure to check our other articles about the different type of life insurance policies you can get.