You are offered insurance for pretty much everything these days, so the fact that you can buy life insurance does not sound that crazy. But what does life insurance even mean? And what do you need it for? And do you even really need it?
This piece will serve as a guide to life insurance so you can rest in peace.
Do You Need Life Insurance?
If you are fortunate enough to have those who love you, it would be a good idea to get life insurance. But why? If you have people you love, a family, or close friends, the likelihood is someone will financially suffer because of your passing, on top of all the emotional pain!
This is because someone has to cover the end of life costs, which at the very least will be a funeral.
Why Get Life Insurance?
On average, funerals cost $7000 to $12000, which can be a crippling cost to some, and this is usually just for the basics, rather than the extras such as flowers, cemetery space, or gravestones. This is why a life insurance coverage plan is a good idea, as it can help with these extortionate prices, and your loved ones can give you the funeral you deserve.
Other ‘end of life’ costs can include mortgages, hospital care, debts, and childcare expenses, to name a few.
However, there are some exceptions. Those who might not need life insurance include those who are single, have no children, have no outstanding debts, and have enough money to cover ‘end of life’ costs. That being said, it is much easier to get cheaper life insurance when you are younger and healthier, which means you can lock in at a lower premium until you need to add on to your policy if and when things change.
Different Types of Life Insurance
When it comes to life insurance, there is no one size fits all! Different life insurance will vary in cost, how the money is paid, and what is actually covered under your policy.
Term life insurance and permanent life insurance are the two main options you can choose from when it comes to life insurance. However, term life insurance is the more popular choice, as it is more affordable, simpler, and allows flexibility in coverage for when you need it the most. Examples of this could be for when the children are still growing up, or the house has not been paid off yet. Permanent life insurance covers those under the policy for their entire lives, which can be significantly more expensive, and often isn’t an option for low-income families.
It is also worth considering how much you want or need to be covered financially, which can be indicated by how many financial obligations you have. Those who just want to cover funeral costs might opt for a lower coverage amount. Those with more financial obligations might opt for something more substantial such as 500k life insurance coverage. If you aren’t sure what amount of coverage will suit you, then use this handy formula to work it out.
Whatever your choice, shop around to find the best deals for you and read the policies carefully to give you and your loved one’s peace of mind.
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