5 Reasons Why You Need Life Insurance
What is life insurance anyway? Life insurance is a contract with an insurance company. By buying a policy, you are protected through the lifetime of the contract in exchange for monthly or annual payments. If you were to die while your policy was open, your chosen beneficiary or beneficiaries would receive a sum of cash. Your beneficiary may use this money to cover a mortgage, ongoing bills, or other expenses for your loved ones.
One of the biggest questions can be, "how much life insurance do I need?" There are many factors that impact this question such as: stage of life, kids at home, debt, etc. When you have young children or are burdened with debt, your goal should be 6-10 times your annual income in life insurance. It's okay if you can't get there quite yet, but that should be what you strive for.
Why you may need it:
1. You have children and/or a partner that you share expenses with. Would your family be financially prepared to cover the household expenses without your additional income?
2. If a parent or guardian has co-signed a loan with you, they will be responsible for paying off this debt if you were to pass away. By adding said parent as a beneficiary, they could use your life insurance to help cover these expenses.
3. You’re a homeowner. Mortgage protection is a type of term life insurance designed to cover your mortgage payments if you pass away while the policy is in force.
4. Funerals are expensive. According to the National Funeral Directors Association (NFDA), the median cost of a funeral is $6,000-$9,000. If you have life insurance, your family won’t have to face the financial burden of an expensive funeral.
5. Group Life. If the only life insurance you have is your policy through work, you may not be able to take it with you if you leave your employer. Even if you can the rates will likely increase. Having a policy you own provides peace of mind knowing no matter what happens with your job or your health, you are covered.
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