You might already be saving up to buy a house or go into retirement, but these aren’t the only things that are helpful to plan out. As people grow older they start thinking about their loved ones who might be left behind at the end of their life. Will they have enough to cover funeral expenses? Are any of them relying on you financially? As you think about the value of life insurance, you might need some help deciding if it’s right for you.
Is life insurance worth it for you? Read on here to find out.
Who Needs Life Insurance?
While some experts say that you should skip paying life insurance premiums if you’re young and healthy, there are some situations in which everyone should consider the value of life insurance. Here are a few variables that help answer whether life insurance is worth it for you.
Dependents
One of the most common scenarios to consider a life insurance policy is when you already have children. Even if you have significant savings, raising children is expensive, and losing the income of a parent can be enough to force families to downsize significantly. It is worth the time to consider life insurance for both parents, in case something were to happen.
If there is a tragedy where both parents lose their lives, ensuring you have a policy will protect your children from having no resources and help family members provide them a high quality of life. In these cases, life insurance was worth the investment.
Partners
Another factor to consider is whether you have a partner or not. If you do, you also may want to seriously consider life insurance. The payout after death can help your partner replace the missing income. This helps ensure they aren’t stranded with a mortgage or rent they can no longer afford.
Who Might Not Need Life Insurance
Young, single people with no children can typically skip out on the expense of life insurance. Is life insurance worth it for them? We say no, as beneficiaries are typically parents who don’t need the added income. If you are concerned your loved ones won’t be able to pay for your credit card debts, student loans, or funeral costs, then you may want to consider a life insurance policy.
Types of Life Insurance
There are two types of life insurance policies: whole and term. Whole policies protect you for the rest of your life. They have no fixed end date and can have a more expensive monthly premium. They also typically require a medical evaluation.
Term policies can be purchased in yearly increments of 10, 20, or even 30 years. People often opt for term policies because they provide security for potential death until mortgages are paid off or until children are fully grown. If you outlive your term policy, you don’t get the money you paid back — so premiums tend to be much lower. Most employer-paid life insurance policies are term policies that last for as long as you work with that company.
Financial Advice at Cash Factory USA
Remember, life insurance isn’t meant to be a windfall for those you leave behind. The money is meant to help pay down remaining debts and help dependents and partners transition to a more affordable lifestyle if they need to.
With all of these details in mind, is life insurance worth it for your situation? If not, continue saving up money in your emergency fund and retirement accounts to ensure a healthy financial future.
Know that these articles contain opinions from the Cash Factory Team. You should always check with your financial experts before making decisions on your financial future.