Life Insurance 101
The question of who needs life insurance is very personal. An easy way to know if you do is to consider if someone would suffer financially if you were to pass away. If the answer is yes, then there’s a good chance that you should consider life insurance.
There are several different types of life insurance. What they all have in common is that they pay cash to your loved ones in the event that you pass away. This lets your nearest and dearest remain on firm financial ground even though your earnings have stopped.
Life insurance can help your loved ones cover virtually any expense they currently (or will someday) face if your financial contributions were no longer in the picture. Just a few include funeral costs, rent or mortgage payments, and childcare expenses.
Some of the people who most commonly consider life insurance include:
Married or partnered people
Those left behind often find it difficult to cover daily and future living expenses without a partner’s financial contributions. This is often as true for young couples as it is for empty nesters eying retirement. Life insurance can help ensure your surviving spouse or partner can maintain the standard of living you worked so hard to achieve.
Watch Christi Dunaway’s story, as life insurance was an important lifeline after her husband died unexpectedly.
Parents
It’s estimated that it costs $233,610 to raise a child to age 18. And that number only increases if you plan on contributing to your child’s college education.
Statistics like this underscore how incredibly important it is for parents to consider life insurance. This is as true for working parents as it is for stay-at-home parents whose unpaid contributions to the family would be expensive to replace. And we can’t forget single parents supporting families on their own—they have an especially important need for financial protection in the form of life insurance.
Check out Jim Chich’s video, a dad who benefitted from life insurance after his wife, Jenny, who was a stay-at-home mom, died during childbirth.
Retirees
Surviving partners often must make do with less Social Security and pension support. They may also have unforeseen funeral costs to cover. This can seriously hamper their finances.
What’s more, if you’re planning on leaving money to heirs, they could be required to pay estate taxes of up to 45%. Life insurance, which is almost always exempt from federal taxes, can be immensely helpful in any of these situations.
Jim Stacherski is a retiree who was helped by insurance after his wife passed away from breast cancer. Watch their story.
Business owners
Surviving family members are often not prepared to take over a business when an owner passes away. This pain is only compounded when a business has debts that are backed by assets like the family home. What’s more, a family that wishes to continue running a business may need to buy out a partner’s shares. Life insurance can be a financial lifeline in all of these situations, with many business owners pairing life insurance with a buy-sell agreement that lets the surviving partners buy out the deceased partner’s shares via the life insurance payout.
Check out Anne Gongos’s video, a surviving spouse who depended on life insurance and the money from the sale of their business to help her when her husband passed away unexpectedly.
In addition to the instances above, there are certain life events that should make you ask “Do I need life insurance?” They include:
- Having someone cosign on a loan you take out
- Changing jobs
- Starting or buying a business
- Buying a house
- Getting married
- Having or adopting a child
- Deciding to go back to school
- Deciding to stay home with children
- Becoming a single parent
- Getting divorced
- Starting to support someone financially like an aging parent
- Starting to save for a child’s college education
- Getting close to retirement
As you can see, there are many reasons to consider life insurance. The good news is that getting life insurance is simpler and more affordable than most people think.One of the best ways is to work with a licensed insurance agent who can walk you through the entire process. If you don’t have an agent or advisor to work with, check out ouragent locator. You can also work directly with an insurance company. Here arecompany partnersthat support our non-profit mission and can assist you in getting coverage directly or through one of their agents or advisors. The key is to start today.
