There are two certainties in life, which are taxes and death. Sounds morbid, right? Maybe, but did you know that life insurance can help you out in both situations? Read on to find out more about life insurance and the individuals who really need it.
What is Life Insurance?
Life insurance is a contract between an individual and a life insurance company. The policyholder (person who takes out the policy) agrees to pay a monthly cost, which is known as a premium, to keep the policy active. If the policyholder dies, the insurer promises to pay the beneficiaries (person/people named on the contract), a cash sum. Note that the person taking out the policy doesn’t have to be the insured person. For example, a wife may have an insurable interest in her husband and, as a result, she may take out a policy on him and pay the premium. What this means is she knows she would suffer financial loss if her husband were to pass away so she’s protecting herself and securing financial help for when that day does come.
Who Needs Life Insurance?
Do you have dependents that need your financial support? If yes, life insurance is the key financial tool that will help your family stay comfortable if anything happens to you. Generally speaking, the number of children you have and their ages should determine how much money you put in your policy. Dependents don’t have to be children so if you have anyone – even an elderly relative or a friend – who relies on you for financial help, taking out a life insurance policy is recommended.
Do You Owe Money?
If you’re single and childless, you might think that you don’t need to take out a life insurance policy and while some can make that argument, it’s not true in every case. If you’re single and childless but you have debt, taking out a policy can be a very wise move. Why? Because if you die and leave credit card bills, medical expenses and/or an unpaid mortgage behind you, your loved ones may end up being responsible for paying back that money.
What Age are You?
If you’re in your later years and you have no children or dependents, you might not need any cover at all. If, on the other hand, you’re in your later years and you have children or a spouse that has not retired, taking out a policy can be very smart. If you’re young, healthy, and you don’t have any children, you might not need cover right now. However, if you do plan to have a family, most companies would recommend taking out a policy ASAP in order to secure the best rate possible.
Are You Healthy?
Does your family have a history of cancer? Is your job extremely dangerous? Have you been diagnosed with a disease? Are you obese? If you’ve answered yes to any of these questions, you should have life insurance. Why? Because you’re considered ‘high risk’ and there’s a greater chance your dependents will need financial help should something happen to you. In that regard, when it comes to covering the cost of your funeral, regardless of your circumstances, you may want to take out coverage to pay for your funeral should something happen to you.