When Do You Need or Not Need Life insurance?
Having life and health insurance is one of the most important things you can do for your family.
There are many types of life and health insurance that can provide coverage for different situations. It may be difficult to imagine the future, but with life insurance, you can purchase an insurance policy designed to help provide money for your family for specific purposes – including helping your spouse or dependent children pay off debts, cover college costs or start a business.
However, there are several situations in which purchasing life insurance may not be necessary. This article is intended to serve as a guide for determining when you need or do not require life insurance products.
Why is Life Insurance Important?
Life insurance is a mutual contract between an insurance company and you, a policyholder. The insurer agrees to pay a certain sum of money upon the occurrence of a specified contingency or death of an insured individual. This implies that when a person dies, his or her dependents or family members get the sum specified in the life insurance policy.
Though a person’s life cannot be priced, a monetary amount based on potential income loss might be calculated. As a result, the assured amount i.e. the amount agreed to be delivered in the case of a loss under life insurance is the benefit. Life insurance policies pay out a certain sum of this money if the policyholder dies or becomes handicapped as a result of an event during the policy’s term.
Life insurance is required because:
- To provide monetary support to your dependents and family members in the case of your unfortunate death
- To pay for your children’s schooling and other expenses
- To establish a long-term savings strategy in place so you’ll have a consistent income source after retiring
- To provide you with additional income if your wages are curtailed due to a major sickness or accident.
- To cover other financial uncertainties and lifestyle needs.
- To cover healthcare expenses by adding critical illness insurance rider to your standard plan.
Who needs Life Insurance?
Whether you need or do not require life and health insurance boils down to the issue of “Is life insurance important to you?” or “Do you have any need of life insurance?” In general, the answer is yes. As a result, carrying life insurance is a necessity in the vast majority of instances. Nobody wants their loved ones to suffer financially after they die. The following are some situations in which having life insurance coverage is more essential than ever.
1. You are currently expecting a child
Life insurance is almost always purchased with the birth of a child in mind. This is because children often bring an immense amount of responsibility to a household which includes covering education and other expenses incurred by raising a child. Before having children, you may not think about the future implications of your death on your spouse and family. But as you grow your responsibility as a parent, you will feel the need to leave a legacy for your kids.
2. You have decided to start a family
Purchasing a permanent life insurance policy is a smart decision for couples planning to start a family or individuals who already have young children at home. While you’ve got plenty of other things on your mind, planning for the future shouldn’t be one of them. Joint life insurance is a special kind of life insurance policy that covers two people. It’s better to have life insurance in place before you have a child.
3. You need to financially assist your aged parents
Approximately 6.2 million millennials worldwide are looking after their old parents, in-laws, or grandparents. If you are one of them, life insurance will assist you to offset expenses while giving you peace of mind that they will be taken care of after your death. You can even consider purchasing term critical illness life insurance for your parents after they reach the age of 50. It covers healthcare expenses for the policyholder when he or she is diagnosed with a serious disease.
4. You owe money on private student loans
If you pass away, life insurance death payouts provide an income tax-free benefit to your family that helps settle any debt you might have left behind. They can be used for anything that your family needs, including private student loans and other debts.
5. Your profession is risky
If you operate in a risky or high-risk situation, your chances of death are higher than regular people. Jobs in transportation, construction, defense, mining, and a handful of other fields in the profession will nearly always require you to pay more premiums. Chances are, your company will provide group life insurance plans. If not, getting separate life insurance for yourself is advisable.
Who doesn’t need Life Insurance?
Insurance is underutilized in most households. With most life and health insurance policies, if you can no longer afford premiums, the money simply evaporates and is lost for good. There are several instances of people who have surrendered their policies midway when they realize they no longer have the need for life insurance. If you don’t need insurance protection anymore, why waste your hard-earned dollars on it?
How do you know when you don’t need to have term life insurance? There really is no cut-and-dried answer. In fact, it depends on your age, level of wealth, the ages of your children, and other factors. However, there are some general circumstances for when you may no longer need a policy.
- When you or your family have amassed enough wealth and income sources to manage finances independently.
- When your kids have grown into self-sufficient individuals.
- When your property is too little to incur property taxes or when you have sufficient liquid assets to cover property taxes.
Life insurance is the only sure step to help protect your family in difficult times. It helps in mitigating the financial hardship when an income earner passes away through death. If you are unmarried, life insurance provides for you to yourself build an internal fund (called an Endowment) which can be used to provide you with peace of mind, protection, or security that can be passed on to someone else in the event of your demise. Make sure you understand the need for health insurance, why life insurance is important to you, and compare products before purchasing one.