8 Reasons To Get Life Insurance In 2021
February 22, 2021 by Living Better
It’s thought that more than 40% of people have either no life insurance at all, or an inadequate amount of coverage to suit their needs. Unfortunately, this risks making a bad situation even worse if disaster strikes.
Life insurance isn’t just for people with large incomes or expensive lifestyles. Here are eight situations where taking out life cover is an essential part of responsible financial planning.
1) Your Income Supports Your Family
If you’re the main breadwinner for your household, life insurance is a must. If something happens to you and you can no longer provide for your family, they’ll still need financial support. Life insurance provides more security and peace of mind, knowing your family will be looked after financially whatever life throws at you.
2) You Have a Mortgage
This is especially true if you have a mortgage to pay. If the worst happens to you, your loved ones will already be going through a difficult time coping with bereavement. The threat of losing their home will only make things worse.
Comprehensive life insurance will ensure your mortgage is paid off in full, giving your family some breathing space while they get back on their feet.
3) You Have Other Debts
But it’s not just mortgage borrowing you need to consider. Most debts don’t die with you, and your creditors will try and make a claim against your estate.
Don’t leave your family responsible for your credit cards, car loans, or other debts when a life insurance policy could pay them off.
4) You Have Aging Family
If your parents are aging and relying on you for some or all of their care, it’s a sensible move to put adequate life coverage in place. They’ll still need looking after if you pass on before them, and this can be ruinously expensive for the loved ones you leave behind.
5) You’re a Stay at Home Parent
Many people think that if you’re not earning an income there’s no point taking out life insurance. However, if you stay at home looking after your family, you’re still playing a vital role.
Who will take over if something happens to you? How will your partner afford childcare so they can continue working?
Including the homemaker in the breadwinner’s policy, or taking out separate coverage, will make sure younger children are still cared for in even the most difficult circumstances.
6) You Own a Business
Careful business planning will separate out your business and personal debts, so that if your business fails your family won’t be badly affected. However, this might not hold true if you pass away.
The costs of keeping your business afloat may be taken from your estate, along with any debts it has. Arranging adequate life coverage for this is a prudent decision.
Also, if your business is your main source of income, your family will need to replace these earnings until the business can be sold or a manager found.
7) You Don’t Have a Funeral Plan
The average funeral costs between $7,000 and $10,000. If you don’t have savings or a separate plan in place to cover this expense, life insurance will take at least one hefty burden off your loved ones in the difficult days directly after their loss.
8) You Plan to Leave an Inheritance
Lastly, if you’re in the happy position of being able to leave an inheritance, it can make financial sense to take out a large life insurance policy instead.
Unlike bequests, life insurance payouts aren’t taxable, and your family will receive the full amount you planned for. However, as with all tax matters, speak to a qualified adviser before deciding on this option.
Despite what many people think, life insurance isn’t just for high earners. Nearly anyone can benefit if they take professional advice and get a suitable policy for their circumstances.
