It can be scary to begin thinking about your plans for the end of your life, but it is oftentimes quite necessary. If you find yourself asking whether or not you need life insurance, we are here to guide you! To be quite honest, not everyone needs to worry about their life insurance yet, but many people do. The big question to ask in order to determine whether you would benefit from life insurance is, “will someone suffer financially should I pass away unexpectedly?” If the answer is yes, you should consider life insurance.
The cash that your family will receive, should you die, is intended to replace your income and help your family meet many financial necessities, such as a funeral, daily living expenses, and even college funding. This is extremely beneficial to many families, as there is no federal income tax on life insurance benefits. Here are some circumstances that will outline where life insurance would be beneficial.
Many married couples will put off purchasing life insurance until they have children, but this is not the wisest choice. If the two of you have a combined income, one of you passing might leave the other one with very few resources. With what was left, would you have enough to pay for credit card debts and car loans? What about covering rent, a mortgage, or utility bills? For those of you who are considering having kids in the future, it’s time to look into life insurance right now, as many companies will not issue policies to pregnant women.
You’re Married and You Have Children
Most families with children to support rely on two incomes to make ends meet. If you or your spouse were to die suddenly, would the family be able to still pay for everything? The standard of living would likely change, and possibly even future plans. The last thing you want to do is force a child to change their life plans in order to support the rest of the family. Would their college goals remain intact? Life insurance ensures that even if you pass away, your children’s future can remain the same.
You’re a Single Parent
If you are raising a family alone, you don’t need us to tell you that you are the primary caretaker, the cook, the chauffeur, the breadwinner, and so on. However, about four out of every ten single parents have no life insurance to support their children should they die unexpectedly. With so much responsibility on just your back, you need to be absolutely certain that you can protect your children’s financial future should anything happen to you.
You’re a Stay-At-Home Parent
Even though you might not earn an annual salary, that doesn’t mean you don’t provide anything for the family, or that what work you do at home has no value. In fact, childcare, transportation, cleaning, cooking, and other household chores are essential to a home running smoothly. The replacement value can be severely underestimated. Should you choose a life insurance plan, your family will be able to decide to hire someone to fill these demands or do whatever else it is they need to keep the same quality of life moving forward.
Your Children are Adults
Just because your children are out of the home and your mortgage is paid off doesn’t mean that you won’t need life insurance. Your spouse would still be faced with tackling day-to-day challenges without you. If he or she has specific care needs, would they be able to hire a caretaker to stand in your place? Would your financial plan allow your spouse to maintain their lifestyle, even without the help of a life insurance payment?
Depending on your estate, your children or other heirs may be forced to pay an estate-tax payment of up to 45 percent after you die. The good news is, the money from a life insurance policy is immediately payable, meaning that your heirs could pay this tax, your funeral costs, and other debts without being forced to quickly liquidate your other assets for less than they are actually worth. Also, life insurance proceeds are typically income-tax-free, meaning that they won’t add to your estate tax liability.
You’re a Small Business Owner
We know you want to take care of your family, but a good life insurance policy can also help you take care of your business. If you should pass away, or another key employee should, then how would your business run? Life insurance can help in several ways. For example, a policy can fund a buy-sell agreement that ensures the remaining business owners will have the money to buy the company interests of a deceased owner at a price decided ahead of time. This means that the owners get the business, and the family members get the money. Also, key person insurance is payable to the company should an owner or key employee pass on. It enables them to hire a replacement or figure out some other arrangement.
To be honest, most single people do not need life insurance, as no one is relying on them for financial support. However, some single people do provide for aging parents, siblings with disabilities, or other family members. Others might have a large amount of debt that they don’t want their family to handle for them should they pass. However, one of the top reasons to get life insurance when you’re young and single is because of the price—if you are young, healthy, and have a good family health history, your insurability is at its peak and the rates will be incredibly low.
Contact Kennedy Financial & Insurance Services Inc.
If you are interested in learning more about life insurance policies, as well as how one may be able to benefit your family and loved ones, reach out to our team today. We look forward to working with you as you find a way to provide for those in your life should you unexpectedly pass away. Contact us now, and we can discuss all your options!