As any financial advisor worth his or her salt will tell you, a life insurance policy is a must-have if you have loved ones who depend on your income. If you were to die, an adequate life insurance plan would ensure that all your family’s financial needs will be covered—from the monthly mortgage and utility bills to your child’s college education. Without life insurance, your family could be in dire straits if something happened to you.
Unfortunately, this advice often falls on deaf ears. In 2008, 68 million Americans still had no life insurance, according to the Life and Health Insurance Foundation for Education. On top of that, most people without life insurance don’t have enough coverage to fully support their family.
If you do not own any life insurance or have minimal coverage, here are three things you might want to consider:
1. Everyone needs life insurance.
Many people mistakenly assume they do not need life insurance because their children are grown and no longer require financial support. These people don’t realize that life insurance coverage can be used for much more than supporting their loved ones.
For example, the payout from your life insurance policy could cover your final expenses, including medical bills, estate taxes, and funeral expenses. Without life insurance coverage, your family will be expected to foot these bills. Considering the average funeral costs $10,000, do you want to burden your loved ones with this heavy financial burden?
You can also designate life insurance proceeds to help fund a grandchild’s college education or donate them to your favorite charitable organization.
2. Three times your income may not be enough.
Some say the best way to determine the amount of life insurance coverage you need is to multiply your annual income by three. However, this amount may not be enough. What if your spouse who cannot work lives many more years after you die? Three years’ income will not be enough to support your spouse for another eight, ten, or even 20 years.
This is why many professionals say the “three times your income” method is not always a good rule of thumb. Because each family faces unique circumstances and needs, you should consider factors other than annual income. Figuring out the right amount of life insurance requires a comprehensive evaluation of your financial goals, debts, investments, lifestyle, and habits.
3. You’re never too old to buy life insurance.
Many seniors believe they are too old to worry about life insurance because they no longer have loved ones relying on their income. But once again, a life insurance policy can help cover your final expenses after you die so your family is not left with the bill.
Before you discount life insurance, it’s important to know all the facts. These valuable insurance policies can protect your family’s financial well-being, pay off your final expenses, and even fund a loved one’s home purchase or college education.
Of course, whether or not you qualify and how much you will pay for life insurance depends on your age, health, and the type of insurance you want to purchase. If you are considering buying life insurance, you may want to meet with a financial advisor or insurance agent who can help you determine how much and what kind of life insurance you need.
One thing is certain: everyone should consider purchasing life insurance. After all, your family’s happiness could depend on it.
We hope you were able to pick something up from our article.