It’s no secret that there are plenty of good reasons to purchase life insurance. However, life insurance is a topic that nobody enjoys discussing. In fact, many people who don’t have life insurance are aware of the fact that they need it, but they are unsure why exactly they need coverage or how much their death benefit should be. Life insurance, like other types of insurance, is about providing you and your family with comprehensive protection for our financial security and well-being. Life insurance is generally used as an income replacement to provide for your family or those who rely on you for financial support. In addition, life insurance can be used to pay debts and expenses, like credit card debt and funeral expenses. However, life insurance is more than just money; it is a simple way to provide and care for your family, even when you are no longer around to do so.
Who needs life insurance?
The decision to purchase life insurance can oftentimes be overwhelming, but many people can benefit from the coverage of a policy. When it comes down to it, most adults will need to have affordable life insurance in order to protect their family from loss-of-life expenses as well as to provide for their future. It doesn’t matter how old you are or what your parental or marital status is, life insurance is an important factor to consider for you and your family’s financial well-being in the future. An unexpected death can put emotional and financial strain on your family. And determining how you provide for your family now and what you’d like to provide for them once you have passed is one of the best ways to see how beneficial life insurance can be to you and your family. If you still aren’t sure whether buying life insurance is the best choice, consider the following situations and see if any apply to you.
I am single
Many people believe that they do not need life insurance because they are single. They don’t have anyone that depends on them for financial support, so why would they need life insurance? The reality is that even when you are single, you likely still need life insurance, but you generally will not need as much coverage as you would need if you were married with kids. Do you have enough money to cover funeral expenses, which can range from $7,000 to $10,000? What about enough to cover any medical bills or debts, like credit card debt, student loans, or a mortgage. If you are like most single people, the answer is likely no.
Life insurance policies can cover your financial liabilities, as well as outstanding debts and loans. And, if you have any cosigners on loans, a life insurance policy will protect them from the responsibility of paying back the loan amount themselves. Not to mention, if anyone relies on you financially, like a parent or family member, you will want to ensure that your policy will cover their future expenses, like medical bills, in-home care, and any other obligations that they come across. Lastly, if you are single but eventually plan on getting married and having children, purchasing an affordable term life insurance policy while single and healthy will enable you to take advantage of low life insurance premiums.
I am married
Once you get married, it is likely that life insurance will eventually become a topic of discussion. You will want to gather enough financial protection to provide for the quality of life you and spouse planned together, even after your passing. And, if you are the household’s main income-generator, your passing could leave your spouse with financial distress if they don’t have enough money saved. What many people forget to consider is that they applied and qualified for a home mortgage or car loan based on theirs and their spouses combined household income. In the event of your passing, will your spouse have enough finances to cover bills and mortgage payments?
If you are married, you may want to cover your income, similar to the amount you would select if you have children. You will, at the very least, need coverage for any potential medical and funeral expenses and pay off any debts that you and your spouse have together.
I am married with kids
Any parent with kids has a need for life insurance. Children are a gift that change our lives completely, including the amount of coverage a life insurance policy needs. When you are married and have children, you’ll want to have enough coverage to replace your income so that your kids can have the opportunities you planned for. You’ll want to find a policy with a death benefit that compensates for your income, pays off the majority of debt, covers college tuition, and provides financial security and well-being for your spouse and kids. If you are like most married couples with kids, you likely do not currently possess a sufficient amount of finances to cover those costs, which is why life insurance is so important for those who are married with kids.
I am a single parent
Being a single parent comes with its own challenges, and not having life insurance can just cause a bigger problem in the future. Since single parents are the primary caregiver and source of financial support for their children, it is important for them to make sure that the kids are cared and provided for in the event of their passing. You love your children and want them to enjoy both professional and personal success, why risk leaving their future at chance by not getting life insurance?
In addition, single parents will need to provide an inheritance or estate that will take care of their children as they grow up, as well as one that can cover debt and loans, like those that come from college tuition. As a single parent, after you pass, having a life insurance policy in place will enable your children to have more opportunities and success.
I am a stay-at-home parent
One downfall of being a stay-at-home parent is often having little to no life insurance coverage. Many stay-at-home parents do not even consider getting life insurance since they do not generate an income. However, in order to maintain a lifestyle that is similar after the passing of a single parent, a family would need to find new solutions for child care, cooking, cleaning, and managing other aspects of their children’s lives. In fact, the value of stay-at-home parents is often overlooked; financial experts estimate the value of stay-at-home parenting services well over $40,000. If you are a household’s main income-generator you may not need as big of a life insurance policy, however, you should still have a plan in place. The death benefit of a plan should cover the costs of childcare and housekeeping.
I own a small business
A small business owner may choose to purchase life insurance in order to cover the costs of keeping their business up and running in the unexpected event of their passing. A policy’s death benefit could be used to fund retirement contributions or pensions. It can also be used to pay severance to their employees. While life insurance will not be an answer to all of a business’s problems, it can certainly assist with covering any additional expenses that are needed to keep it on track.
I am an empty nester
An empty nest refers to a household in which married parents or single parents — the empty nesters — live after the children have left home, whether for college, marriage, or work. Many parents have the misconception that once their children are college bound or graduated they no longer have a need for life insurance. Of course, they will not have the same type of financial responsibilities that they would with children still living at home. However, you may not be prepared for retirement, and your partner could potentially miss out on some of your retirement benefits. If you are an empty nester with a mortgage or costly living expenses, we recommend getting a long-term life insurance policy to supplement your retirement accounts, Social Security checks, assets, and savings accounts.
When you retire, you are choosing to no longer earn a working salary. However, you should still be earning retirement income to cover living expenses. While some employee benefits can transfer over after retiring, not all of them do. A great example of this is the income from social security — if both you and your spouse both worked, then social security checks will be coming in the mail for the both of you. However, if a spouse were to pass, the other will still draw the higher amount of the two checks, but it still might not be enough to cover all the existing debt and expenses.
Another benefit of purchasing life insurance is the ability to spend the cash value of the policy over a lifetime, while still being able to leave your family an inheritance or estate. Of course, we do not recommend getting coverage for any of these reasons if you are over the age of 65, but if your 30-year term life insurance policy is up for renewal in your mid-50’s, these factors might encourage you to renew it as long as the plan has affordable life insurance premiums.
There are many life insurance policies available to cater to your situation, like the ones above. It is important to keep in mind that the sooner in life you purchase coverage, the lower the premiums will likely be. If you don’t have life insurance, waiting will only make it more expensive.
Whether you are ready to purchase life insurance in Calabasas or are unsure what policy best covers your needs, get professional help from Kennedy Wealth Management! We can help you choose affordable life insurance policies that will benefit you and your family. Our professional insurance agents are ready to assist you with the selection process by reviewing your assets and looking at the potential needs of your loved ones after your passing. To learn more about our life insurance services or to receive a free life insurance quote call the professional agents at Kennedy Wealth Management!