You may not realize this, but life insurance is one of the most important financial decisions you can ever make. The question I often get is how do I determine the appropriate level of life insurance and what should I consider when getting it? Here are 5 reasons why you need life insurance.
You may have heard that life insurance is for the people that you leave behind. Buying life insurance is a selfless act, because you are thinking about the people who will deal with the fallout of your loss. This is especially true if you are married and/or have children. How will their quality of life be affected by the sudden loss of the income you bring to the household? Will the surviving spouse need to pay for childcare so they can continue to work? Do you want to make sure they are able to remain in the home and not disrupt your children's life? These are important questions to consider.
Even if you are single and don't have others relying on the income you bring to the household, you may have debts that require payment if you pass away. Things such as a mortgage or student loans are debts that might still need to be paid off even if you are no longer here. The family member settling your estate will be responsible for this and having tax free assets to take care of these items would certainly be welcome and save them headaches later.
Picking up on the previous point, settling an estate costs money. There are several administration costs that most people are not aware of. Unfortunately, people don't think about these things until it is too late. It is the person who is responsible for settling the estate who uncovers these costs as they go through the process.
Again, you don't want the family worrying about how to pay for the funeral while they are in the midst of mourning your loss. It is an unnecessary burden to place on them. The average funeral costs anywhere between $10,000 to $15,000 when all is said and done. Preparing for something we all know is guaranteed to happen at some point just makes sense.
Most people think life insurance is something they can just purchase at any time. Unfortunately, that is not the case. You must qualify for life insurance by going through underwriting. This involves an application, health questionnaire, and in some instances a physical exam. Your age and health are the two primary factors affecting the pricing of insurance. This is why I advise people to get life insurance when they are young and presumably healthy. That way you lock in your insurability.
I hope these tips are helpful to you. As always, you can reach out to us here if you want to discuss the possibility of getting life insurance for yourself or someone you know and love.