Having life insurance is never a bad thing. However, you might be wondering whether or not you need to pay for a life insurance policy in your given circumstances. Before you decide you don’t need life insurance, consider this: the average cost of a funeral in America is roughly $10,000, and it's only expected to increase. Add those costs to any additional expenses, and you’ll see the value of a life insurance policy. Although you shouldn’t treat your life insurance as you would a financial investment, you should see it as a valuable asset that will secure the future of your loved ones.
Life insurance is a good “investment” if…
- You’re married or unmarried with children.
If you’re a parent, you’ve probably considered life insurance already. Your unexpected death would devastate your spouse and children emotionally; it can also leave them in financial ruin, especially if you are the breadwinner of the family. A surprising 40% of single parents don’t have any life insurance—and with all of the parental responsibilities on their shoulders, they can’t afford to be missing out.
- You’re married without children.
Think about how your death will impact your partner. Will you leave behind hefty debts? Is your mortgage payment too much for your spouse to handle alone? And who will pay for the funeral? If your husband or wife makes less money than you, a modest policy can go a long way.
- You’re young and single.
Young adults are least likely to buy health insurance and life insurance. While chronic illness and mortality are on the minds of the older generation, no one is immune to accidents and unknowns. However, your life insurance money may prevent your parents from shouldering your financial burdens, such as student loans, medical bills or the lease on your new apartment. And while you’re establishing yourself as an adult, you should take advantage of the low monthly rates for 20- and 30somethings. Your future self will thank you.
- You’re retired and possess a large estate.
The kids are grown-up, the mortgage is paid off, and you and your spouse are living off of retirement money and other investments. If you no longer have dependents relying on you and your spouse can live comfortably after your passing, would you still need a life insurance policy? It’s not a bad idea if you have a large estate. The money from your life insurance can be used to pay the IRS’s estate tax.
Life insurance is important.
According to a 2015 survey by LIMRA, 42% of all Americans (and about 30% of all American parents) don’t have life insurance. However, 43% of Americans would be financially affected by the death of a loved one. The reasons why people don’t have coverage are varied; young people don’t see life insurance as an immediate priority, some people would rather use the money to pay for utilities, and many believe that life insurance is too expensive.
In reality, you can lower your life insurance payments by changing your lifestyle. Nonsmokers have lower premiums than smokers do, and if you have a good credit score, you’re more likely to get a good deal. Before deciding that you don’t need life insurance, consider the financial hit your family would take if you died tomorrow. Shop around for a good policy, and be aware that most funeral homes don’t take a payment plan. The last thing you want to do is leave your loved ones in a tight spot.