Soon-to-be-parents have a long to-do list to get everything ready for their bundle of joy. They have to get all sorts of things from cribs and strollers to bottles and onesies. They have to get the car seats inspected for safety and get the toys that are educational. But do they have to get life insurance?
Is life insurance really necessary?
Sure, you’re young, fit and eat organically. You exercise three times a week. For all intents and purposes, you’re completely healthy. Life insurance is not something you think about on a regular basis. Comparing companies’ rates and services for something you probably know little about isn’t how you want to spend your precious free time. And an extra expense on top of all the kid-related spending isn’t welcome either.
Then why is it so important?
If you have children or plan on having them, life insurance helps protect your loved ones financially if you die. It can:
Provide income replacement.
If your salary contributes to your family’s well-being, its loss if you die could be the difference between your family getting by to it struggling to put food on the table. If you share the financial responsibilities with your partner, imagine how much of a weight would be placed on their shoulders as they become the sole breadwinner for the family.
Pay off debt you leave behind.
You have a five-year plan to pay off the credit card debt you acquired when you started that small business a few years ago, right? If something were to happen to you before then, the burden of that debt would be placed on your family’s shoulders. If your income is deleted from the equation, chances are they won’t have the resources to comfortably make the regular payments. With a life insurance plan, your family receives a monetary amount that can be used to cover the costs of your unresolved debt.
Pay for funeral and burial expenses.
While we don’t like to think about it, funerals are expensive. Funeral-tips.com estimates that an average funeral costs from $7,000 to $10,000. Without life insurance, these costs are covered by family.
Increase financial stability.
By naming your children or dependents as beneficiaries, they receive a payout when you buy a life insurance policy. If you do not have other assets to pass down, this money can help your children build a stable financial future. Beneficiaries can use the money for anything they wish, from college tuition to starting a business.
When you don’t really need life insurance
You do not have any dependents. If you do not have any children and are not planning on having any, life insurance is not as important for you. If you already have independent adult children who may not need your financial assistance, you also could choose to go without life insurance. It is mainly meant to take care of your dependents after you die. However, you can take out a policy and name your partner as the beneficiary if you wish to provide for him or her.
How much does life insurance cost?
The costs of insurance vary greatly, and the first thing you need to look at is whether you want to buy term life or whole life insurance.
Term life insurance costs less and will pay out if the covered person dies within a set amount of time, from one to 30 years. If you pass away unexpectedly, your beneficiaries receive a set amount of payout. If you live past the set amount of time on the policy, the insurance company keeps the money and your beneficiaries do not receive any of it.
Whole life insurance costs more and covers you for the span of your life. There is no set term in which the insurance expires and you will never lose coverage.
Each insurance company offers different policies and coverage that depend on the insured. Some require a medical exam while others do not. For example, a healthy 30-year-old woman can pay just under $12 per month for a 10-year policy worth $250,000 of coverage with MetLife. That same healthy woman would pay about $99 per month for a whole life insurance policy with the same company.
While it can be difficult to think about your family living without you, getting life insurance can be one of the most important, selfless things you can do for them. When you sign up for a life insurance policy, you are ensuring they will be OK financially after you are gone.