It’s never nice to think about uncomfortable things like your own death. However, if you have children or dependents who rely on you to cover their living expenses or even a mortgage, and you don’t have enough savings, it might be wise to consider life insurance.
So, what is life insurance? Simply put, life insurance can protect your family financially in the event of your death. It is especially useful, if you are:
- The Main Earner
If you are the sole breadwinner of your family, life insurance can help your family to pay for rent and other living expenses in the event of your death.
- Dual Earners with different incomes
If your spouse’s income is not enough to support the family or the life you built, you might want to consider getting life insurance, so your spouse and other dependents are covered in the event of your death.
Life insurance coverage normally differs by term life insurance or whole life insurance. If you want to protect your family from the loss of your income during a certain time-frame, for example while you’re paying off a mortgage, you might want to go for term life insurance. But if you want to offer your family or your family business long-term financial protection in the event of your death, you should consider whole life insurance.
Most policies tend to have exclusions, such as drug- or alcohol-abuse related deaths. Also, if you have a life-threatening illness by the time you sign up, death relating to that particular illness may be excluded from a payout. Further, life insurance will only pay out in the event of death, not if you can’t support your family due to a disability or illness. Nevertheless, you might be able to buy supplemental coverage in case of critical illness or disability. You might also have to pay a higher premium if you take part in high-risk sports.
Do I need Life Insurance?
If you are a single person without dependents, you might not need life insurance. Although it is always a good idea to think about the future and start paying premiums from an early age so you can protect your family from the unexpected. You never know what life throws at you, and it’s always better to be prepared.
How much Life Insurance do I need?
This depends on a few factors, such as how much your family needs, and how much debt you have. If you have a lot of debt besides your mortgage, you might have to purchase more life insurance so your family can cover their living expenses and your debt after you passed. Also, calculate how much your family needs on a monthly or yearly basis – don’t just guess. Also, think about how much you save every month. If you are good at saving money that can support your family in the case of your demise, you may not need to purchase as much life insurance as you would without savings. Do you want to learn what type of Life Insurance do you need?