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Who Needs Life Insurance?
Do I need life insurance?
The quickest way to know whether you need life insurance is to ask yourself one question: Would your death have a financial impact on the people in your life?
If the answer is yes, then you may want to consider life insurance.
Life insurance beneficiaries — who could be your spouse or dependents, for example — can use the money to cover their financial needs, whether that’s paying household expenses or covering debts.
Check out these insurance companies that offer term life insurance
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Who needs life insurance?
Breadwinners: If your spouse or partner relies on your income to survive, your death could leave them without a way to support themselves. The payout for a life insurance policy can help them cover living expenses and pay off debts like a mortgage so they can maintain the lifestyle they’ve become accustomed to.
Stay-at-home parents or spouses: Even if you don’t earn a traditional salary, you may still need coverage. Stay-at-home parents and spouses provide services that can be costly to replace, such as cleaning, cooking and child care. A life insurance payout can help your partner cover the costs of these services during a difficult time.
Parents or grandparents with dependents: Minor children, unable to provide for themselves, could be put at a major disadvantage if your income disappeared. The same is true if you help cover college costs or provide support for someone with a disability. A life insurance policy can help cover these costs during the years that your dependents rely on you.
Small-business owners: Your business might struggle if you were to die, especially if you’re integral to its daily operations. A life insurance payout can help your business partners or heirs cover a variety of expenses, such as buying out your share of the company, covering office rent and employing additional help in your absence.
People who want to cover their final expenses: According to the National Funeral Directors Association, the median cost of a funeral with viewing and burial is $7,848. Depending on your wishes for your funeral, it could cost more. With a burial life insurance policy, you could pay your own way, so to speak, keeping the burden off those tasked with executing your final wishes.
Co-signers or co-owners of debt: In most cases, debt does not pass to other people. However, if another person co-owns or co-signs the debt, they could be left holding the bill. Spouses in community property states such as California and Texas may also be responsible for outstanding debts, even if they’re not co-owners or co-signers. You can use life insurance to cover your debts if other people would be responsible for them, helping to pay them off in your absence.
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Who doesn't need life insurance?
Remember that the younger and healthier you are, the more affordable life insurance is. If you see major life changes on the horizon, such as marriage or children, it may be worth exploring your options to lock in a good price at the right time. It’s a good idea to compare life insurance quotes from a range of companies to get the best possible coverage at the lowest price.
What type of life insurance do I need?
Typically, life insurance falls into two categories:
Term life insurance
Generally speaking, term life insurance is the more affordable and flexible option, and thus it's the better choice for most people. You can tailor term life insurance to cover the years of your life when your death would most affect your loved ones and then reassess when they are able to support themselves.
Permanent life insurance
There are some situations in which permanent life insurance makes more sense, particularly if you want the policy to pay out regardless of when you die. Types of permanent policies include whole life and universal life. Whole life insurance is the most common type of permanent coverage, offering fixed premiums and guaranteed cash value growth. Universal life insurance is more flexible, offering adjustable premiums and death benefits.