Do you need life insurance? You may be wondering whether you really need to spend money on getting life insurance, or if it’s just an unnecessary expense.
The truth is, getting life insurance is a necessity and can protect you and your loved ones from sudden financial expenses. This guide will tell you everything you need to know in order to choose the best life insurance plan for yourself.
What is Life Insurance?
Do you need life insurance? The answer will begin from knowing what life insurance actually means.
Life insurance is basically a contract between you and your chosen insurance provider, where you pay premiums and the insurance company will then provide a death benefit to your chosen beneficiaries after you have passed.
This type of insurance plan allows your loved ones to have financial backing at the time of your death. They can use the money to pay bills, funeral costs, or to go through life in general.
Why Do You Need Life Insurance?
What happens if you were the only breadwinner in your family, and you passed on suddenly? In a situation of your death, life insurance is there to ensure that your beneficiaries can continue to survive. They will have enough money to pay for enough of their lives in order to get back on their feet after you are gone.
This prevents your family or loved ones from feeling financially insecure, and from having to go through practical hardships as a result of your passing.
Types of Life Insurance
There are various types of life insurance to suit your needs. When choosing a life insurance plan, make sure to keep in mind your financial restrictions, and whether you need to be covered for your entire life or for a short period of time.
Term Life Insurance
A term life insurance plan lasts for a specified period of time. This can be a few years, and then it will expire. If you pass away before the term ends, your beneficiary will receive the death benefit (the amount of money that you’ve set for them to receive).
If you want a budget life insurance plan, this may be the choice for you. It tends to be more affordable than other life insurance policies, and that’s because it only lasts for a few years. If you have not passed within the term, you will have to pay for another term life insurance plan to cover more years.
Whole Life Insurance
In contrast, whole life insurance represents an insurance plan that lasts for your entire lifetime. It will typically have a death benefit and a cash value, which you can receive interest on.
You will pay a specified amount of money to the insurance company every month, and when you die, your beneficiary will receive the coverage compensation.
When compared to a term life insurance plan, this type of life insurance may be a lot more complex. This is because you will have to go through taxes, interest, and more. Whole life insurance is also going to be a lot more expensive than a term life insurance because it will provide coverage for your entire life.
Who Needs Life Insurance?
In an ideal world where money is not an issue, everyone should have life insurance and benefit from the safety net that it brings. That, however, is not always the case. These are several categories of people who will most benefit from a life insurance plan.
People With Dependents
If you are a parent, having life insurance is always a necessity. This is especially true if your children are too young to be financially independent. In the unfortunate circumstance of your passing, having life insurance will ensure that your children have enough funds to see them through going to school and surviving for the day-to-day.
This will also ensure that your partner will not have to suddenly bear the financial burden of raising your children without any form of support.
People With Partners
If you have a partner and have been pooling together your finances, you will likely need a life insurance plan. This enables them to remain financially secure in the event of your passing.
The sudden removal of your entire income can be devastating to your partner’s financial goals. Having a death benefit from your life insurance will provide them with a safety net in the short run.
People With Debt
What if you passed away, and someone else needs to inherit the enormous sum of debt you still have? In these scenarios, it would be beneficial to have a life insurance plan. This gives your beneficiary a chance to pay off your debts with the death benefit.
This prevents your loved ones from being bogged down by a sudden enormous expense.
People Who Own Companies
If you are the sole owner of a company and you passed away suddenly, your company may fail without your support. Your business partners and employees would need financial backing from you to survive.
Do You Need Life Insurance? The Answer is Yes.
Do you need life insurance? The answer is yes, because the best life insurance plans provide your beneficiaries with enough financial backing to support themselves. This is especially useful if your loved ones or beneficiaries were depending on your income to live.
By having a life insurance plan, you can ensure that they will not have to struggle financially as a result of your passing.
Did you find this article helpful? Check out the rest of our blog.