Life Insurance: Do You Need It?

Life insurance is a way to protect your loved ones financially if and when you pass away.

If any of the following are true in your current situation, then you should consider getting or increasing your life insurance coverage.

• You are married and you spouse depends on your income
• You have children or other family that is dependent on you for support
• Your savings won’t be enough for your spouse to live on
• You own a business
• You have a personal loan, mortgage, or other debt for which another person would be responsible for after your death

The proceeds from life insurance can help your loved ones to continue on financially without having a huge burden in the case that you die.   Obviously funeral expenses are are another thing that must be paid for, and that usually costs at least $10,000.  Plus the huge benefit is that life insurance proceeds are not taxable.

Living without life insurance can be scary, is a risk that should not be taken.  One of the biggest paybacks for those who have life insurance is the peace of mind that comes along with knowing your loved ones will be protected and set financially in the case of your death.  Even if you have term insurance and don’t actually end up dying before the end of the term, the increased peace of mind is worth it.

Term vs Whole Life Insurance

Term coverage is life insurance for a specific number of years, and when it ends, you have to reapply or decide to go without.  Whole life is coverage guaranteed to pay out whenever you die as long as you keep paying the premium.   Term is much, much cheaper and more simple.  Whole life has many more options and side benefits.   For most people we suggest term coverage during the working years as you are building up your savings.  Then the goal should be to be “self insured” by the time you retire, by having a large amount in retirement savings that would pass on in the case you die.   But in some cases whole life is the better option.

I am going to go over 6 common myths that you might have heard about life insurance.

1. The coverage you get at work is enough.

Life insurance through your employer can be a big financial help, but usually doesn’t even come near the amount  of coverage you need.  It is also dependent upon your employment with that company which can never be guaranteed.  The coverage you get from work may be enough, but only if you’re single, in good financial standing, and have no dependents.  For most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs.

2. Only the working spouse needs life insurance.

Life insurance on the breadwinner is there to fill in the gap left by the loss of a income, but that discounts all the valuable work a stay-at-home partner contributes to the family. How would you pay for child care, the cleaning, or even the time off of work for the grieving period, let alone the definite costs of the funeral, without a little financial help in the event of such a loss? It can be hard to monetize the many contributions of the non-breadwinner, but to overlook them would be a bad idea.

3. The value of your life insurance coverage should equal two years’ salary.

Everyone’s financial circumstances are different..  You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If you don’t have any dependents, and you don’t have a mortgage, then two years’ salary may even be excessive.  A lot also depends on what gives you peace of mind regardless of your circumstances.

4. Single people without dependents don’t need to own life insurance.

While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off debts, and maybe leave a little bit behind for your parents and or close family and friends.

5. You don’t need professional services to buy life insurance.

We do not charge a dime to get quotes or meet and go over your situation.   In the cases I have seen, most people who try to go online and get life insurance without an agent end up paying way more money then if they just contacted an agent.   We work with almost all life insurance companies to get the best price for our clients.  With the knowledge of and access to a myriad of different policies, riders, coverage amounts, prices, and benefits of different companies, a licensed agent can help you find exactly what you need for the right price.

6. Life Insurance is expensive

Compared to health insurance, life insurance is walk in the park.   Unlike health insurance, prices on life insurance have actually dropped over the last few years.  The price you pay is dependent on your age and health, but most people are surprised as to how affordable it can be.  For example, for healthy people under the age of 35 you can get $500,000 of term coverage for under $25 a month.

Whether you have life insurance or not, it would be a smart financial decision to talk to us about it and see if we can either get you covered, or get you quotes to see if we can save you money compared to your current policy.  What is there to lose?

By Jimmy Hancock

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