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Why Get Life Insurance

Deciding Whether You Need Life Insurance

Deciding whether you need life insurance doesn’t have to be a complicated process. These articles will help you to make an educated decision by highlighting topics to which you should give some thought. 

As many Americans grow older, get married, start a family, and began a business, they realized that life insurance is indispensable and fundamental to a sound financial plan. Over the years, life insurance provides peace of mind knowing that money would be available to help protect your family and estate.

Let's start with the most obvious reason for why someone should invest in life insurance ... the fact that it can replace the lost income if you die and still have dependents. You may want your children to go to college and for your family to continue to enjoy a certain kind of lifestyle. Likely, you still want this to happen even if you die prematurely. But, if you are the primary bread winner for your family, they may not be able to afford it if you die. They may not have enough savings to cover their expenses. You can address those concerns by buying enough life insurance.

The Bottom Line

Life insurance is not for everyone. But, you shouldn’t simply dismiss it without doing some research. If you have others who depend on you financially, it is very likely that you need it. Our Life Insurance Advisor can help you to decide which type of policy is best for you and your budget. Buying life insurance can be one of the best financial steps that you take for you and your family.

Guess what…Burial insurance - doesn’t really exist.

It's just a term used for a policy that’s meant to cover funeral/burial costs. The most common form of burial insurance is “simplified issue” whole life, so called because it doesn’t require a medical exam.

If you pass away suddenly, your family could be responsible for some major expenses, especially if you don’t have life insurance to help shoulder the burden. Life insurance is an excellent way for seniors to protect their families from becoming financially overwhelmed with end of life expenses.

A life insurance policy can help your family pay funeral expenses, medical bills, and other outstanding debts such as mortgage payments, credit card bills and personal or business loans. 

Life insurance can also help bridge the gap which can occur for a surviving spouse that’s receiving Social Security benefits. As many survivors discover, Social Security benefits are often amended when a co-beneficiary passes and this can take time. Life insurance benefits are paid in the form of a lump sum payment and are generally tax-free, so your beneficiaries can use the proceeds any way they choose.

Single parenting means a single income source which means making the right moves financially is that much more important. Today more than 20 million children in the U.S. live in single parent households. That’s more than a third of our children, up from less than a quarter of American kids back in 1980.

With one person playing mom and dad (not to mention cook, chauffeur, teacher and everything else), single parents’ schedules are often already stretched to the breaking point. That’s why it’s critical to make time to put together a financial plan and life insurance should be a part of that plan. Here’s why… because if something were to happen to you, you want to ensure that your dependents will still be cared for.

When you’re building a life together, your foundation may need the protection that life insurance provides. Why? Consider this…

Couples often combine their incomes for financial obligations, such as buying a home or new cars and having children. If something were to happen to one of the wage earners for many couples the remaining spouse wouldn’t be able to bear these costs on just one income. One of the primary reasons for buying life insurance is income replacement, so that your family can continue their lives without struggles.

Another consideration is there’s a chance that your spouse might inherit debts left behind when you die. Your spouse would be on the hook for debts in any joint accounts. Also, in community property states your spouse would be responsible for debts you took on after getting married, such as personal credit card balances and mortgage loans.

Plus, the younger you are when you buy a policy and lock in life insurance rates, the more money you’ll save. The rates you’ll be quoted for a policy will get more expensive with each passing birthday. On top of that, you never know when you might develop a medical condition that could lead to higher rates when you need to buy a policy.

Once you’ve decided to buy life insurance, the question becomes what type and how much coverage to buy. The answers to those questions will generally depend on your financial obligations. How long those obligations will last and how much you money you want to spend.

Term life is the most affordable way to buy life insurance protection and it is suitable for most needs. It pays a set amount if you die while the policy is in effect. You decide how much the payout would be based on the benefit coverage amount and how long the policy will last. You can select 10, 15, 20 and 30 year term lengths. 

Permanent life insurance lasts your entire life and builds cash value. It is good for people who want to provide money no matter when they die, such as funds to pay for a funeral. Because you can take a loan against the cash value, it can also be used as a source of funds later in life.

Need help determining what type and how much coverage? Contact a Life Insurance Advisor to help you figure out you needs.

There are now more single than married households in the U.S. and people are staying single longer. Single people are also more likely to experience major life events, which often lead to the purchase of life insurance, including having children and buying a home. Also, single people are often responsible for parents or grandparents, and they want to make sure those dependents will still be cared for.

Buying life insurance as a single 25 year old that plans to have children one day can be more affordable than waiting to purchase the insurance until you’re a 32-year-old father. That's because rates tend to go up with age, and life insurance is pretty cheap for healthy young adults in their 20’s. It can also become prohibitively expensive or even impossible to obtain if a major health problem crops up later.

As for whether or not single people need life insurance, the answer is sometimes. For any single parent, the answer is probably yes, and anyone supporting other family members might want to consider it, too. Some young people decide to take out insurance just to ensure no one else has to deal with the funeral expenses or any debts, like a mortgage or student loans.

As for what type and how much life insurance to get, it's hard to apply a standard formula to every situation. Speaking with a Life Insurance Advisor can help you answer those questions.

One typical reason young people (in their 20s and 30s) buy life insurance is to protect their insurability. While you’re considering all the other financial priorities that you have as a young adult, you might also want to give some time and attention to taking care of potential future life insurance needs.

It will be less expensive to purchase life insurance now, while you are young and in excellent health, than it may be a few years down the road when you have a family to care for.

Please view our infographic here: document link

This is perhaps best demonstrated. For now, we’re going to ignore health as a factor in premium costs, and focus mainly on age. Since we definitely know you will be ten years older in 10 years, but your health is an undetermined factors.

Let’s say that you are 35 years old male, non-smoker. Given that profile, you can purchase a 30-year term life insurance policy with a death benefit of $500,000, which will be about enough to cover the average young family. The premium for this policy will be $46.22 per month, or about $554 per year.

Now let’s assume that you decide to wait to purchase life insurance until you are married and have children, at about age 45. The cost for the same 30 year term policy for $500,000 will increase to $110 per month, or about $1320 per year. That’s an increase in the premium of more than 50 percent! Plus, it will come at a time when you have family obligations, and extra cash will be short.

You may be able to work around this problem by reducing the term of the policy down to 20 years. At age 45, a 20 year term policy for $500,000 will be $102 per month, or about $1224 per year. That will keep the premium close to what you could have gotten 10 years earlier, however it will reduce the term of the coverage by a full decade.

The fact that the 20 year policy taken at age 45 is just about the same as the 30 year policy taken at age 35 is not a coincidence. In each case, the term of the policy will expire at age 65. That means that the risk between the two policies is just about equal. The only difference – causing a small increase in the premium at 45 – will be the fact that you’re 10 years older. That does carry a slight risk of early death, certainly more so than it would at age 35.

Now let’s factor in health. The younger, healthier you are when you purchase a policy the more likely you will get a preferred rating because you’re less likely to have developed any medical issues. Given that you’ve chosen to wait until you’re 45 with health issues if you purchase a 30-year term life insurance policy with a death benefit of $500,000. The premium for this policy will be $176.69 per month, or about $2,120 per year.

Life insurance premiums are very affordable especially at younger ages.  Waiting to apply will cost you more and you also face the risk of developing health issues that will make the premiums even higher.

Yes, absolutely! Both term and permanent life insurance policies are available for seniors. However, there are some limitations when it comes to buying term life insurance. All life insurance companies have a cut off period for term life insurance policies, which can vary from company to company. After this cut-off point, term life insurance may no longer be available to you, but you can typically find certain types of permanent policies and annuities.

Certain term lengths may no longer be available to you at a certain age. In other words, a person who is 75 years of age may still be able to buy a 10-year term policy, but may not be able to buy a 15 or 20 year term life insurance policy. If you reach the cut-off age for a term policy, there are permanent life insurance options you can buy at any age, such as whole life or universal life.

There are varieties of age-limited universal life insurance policies you can purchase that have similar features to a term life insurance policy. You can buy the policy for a specified time period or up to a specified age. These types of universal policies vary from one insurance company to another.

Senior citizens may need life insurance for a variety of reasons. The most important reason may be for income replacement. If you’re retired, your spouse may be financially dependent on your pension income; if you pass away, your pension could cease as well, leaving your spouse in a difficult financial situation.

If there is insufficient funds available to your survivors, depending upon their phase of life they may experience the impact from the loss of income. Your life insurance benefits may also be needed to pay off any existing debts such as medical or funeral expenses and outstanding loans.

Life insurance for senior citizens can also be important if you’re planning an estate or family trust, or if you still have business obligations. If you still have dependents, you may want to leave behind a financial legacy, and life insurance can help you set that up with ease.