7 reasons you may need life insurance, even if you think you don’t
- Most people don’t consider life insurance until later, but the best time to buy it is early on — even in your 20s.
- If you financially support a partner, children, or aging parents, you need life insurance.
- Anyone working a high-risk job or with extreme hobbies is likely to pay more for coverage, but those risks alone are reason enough to get life insurance.
- We can help you find the best-suited life insurance policies for you with the right coverage at the right price.
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Most people aren’t thinking about life insurance in their 20s, but it’s the best time to buy it because most people’s health declines with age. The longer you wait to buy a policy, the greater the eventual cost.
An average 20-something or 30-something nonsmoker can expect to pay between $10 and $50 a month for a term life policy depending on the coverage amount. That’s less than the cost of a gym membership to protect your family’s financial stability in your absence.
Your life insurance needs change as you age, and you’ll need to consider children, marriage, divorce, retirement, and caring for aging people.
If you don’t have life insurance, there are seven reasons you probably need it.
1. You are going to have a baby or already have children.
If you don’t make it home and someone relies on your income to live, then you definitely need life insurance.
The birth of a child is usually a motivator to get life insurance coverage Most people get life insurance to cover the mortgage, education, and other expenses so that their family can continue after they die. If you’re planning to have a baby in the next year or so, now is a great time to buy life insurance.
If you’re already pregnant and you’re the breadwinner of the family, it’s possible to buy life insurance, though you’ll probably get the best rates if you undergo a medical exam before or after pregnancy.
2. You’re planning to get married
There are some questions to consider before going down the aisle. Like, will you have individual or joint-life insurance policies?
Certain life insurance products, known as joint life insurance policies, are geared towards married people. Joint life policies are beneficial for high-wealth couples seeking to lessen the impact of inheritance and estate taxes on their beneficiaries.
If either person is bringing children from a previous relationship into the marriage, there should be a discussion about protecting the assets and inheritance of the children. For life insurance policies where the child is to benefit, a trust should be established because a child won’t be able to access the proceeds if they’re a minor.
3. You support aging parents financially
Ideally, your parents have already purchased life insurance as part of their retirement planning. However, according to a 2018 AARP Public Policy Institute report, about 6.2 million millennials and counting are acting as caregivers for a parent, in-law, or grandparent.
If you are caring for your parent at home, in assisted living, or in a nursing facility, life insurance with a long-term care rider will help you defray costs.
4. You have private student loan debt
If your parents co-signed your private student loans, life insurance means they won’t be left with the debt if you die. Even if your parents weren’t co-signers, you don’t want the repercussions of having debt left behind to your estate, especially if you’re married.
Federal student loans are discharged on the death of the borrower. Unfortunately, if you die, private student loans become part of your estate debt. It’s at the discretion of the private lender whether to discharge your debt, according to the Student Loan Borrower Assistance program.
5. You work for yourself or have a family-owned business
If one member of the family is key to the business, their disability or death can cause revenue streams to go south, Silvia Tergas, a financial planner with Prudential, told Insider.
She recommends a business-owned life insurance policy and business-owned disability insurance that names the business as the beneficiary so it can continue.
Also, if you get a business loan, most lenders will require life insurance like decreasing term life insurance, where the bank is the beneficiary to pay off the loan if in the event the business owner dies. It’s similar to getting life insurance to cover private student loan debt.
6. Your job is high-risk
At the end of the day, life insurance is risk management to deal with premature death, loss of income due to illness, or disability.
If you work in a dangerous or high-risk environment, you have a greater chance of dying than someone who sits at a desk all day. Jobs in aviation, construction, firefighting, mining, oil and natural gas, and a few others will almost always result in a higher premium.
Even if you have employer-provided group life insurance, if you leave your job (resign, retire, or are terminated), you lose coverage. Also, group life insurance may not be enough coverage. It is recommended that you typically select 10 times your annual income as your death benefit.
Being in a high-risk job increases the likelihood of disability. Disability insurance is like an insurance for your paycheck if you are unable to work. Although many people probably have a short-term disability through their employer, long-term disability insurance is the one that most people need and do not have.
7. You have extreme hobbies
If you’re a thrill-seeker with a penchant for extreme sports, you’ll probably be deemed a higher risk by a life insurance company. But it’s similar to having a high-risk job — you’ll pay more to be insured, but the cost is worth it considering the likelihood you’ll die from unnatural causes.
If you do have an extreme hobby — like rock climbing, scuba diving, or something equally thrilling — it’s best not to lie about it on your life insurance application. If you die within the first two years your policy is active and you didn’t disclose your regular high-risk activity, the insurance company has the right to decrease the death benefit, or cancel it all together.
As for the cost, you’ll typically see either a higher base premium or an extra annual fee calculated as a percentage of your coverage amount. Every insurance company assesses the risk of hobbies differently, so it’s good to compare if this applies to you.
To maximize the benefits of life insurance, it’s wise to include a financial advisor, accountant, and estates attorney in your decision-making process to ensure you have the proper coverage that adapts as your life changes.
Answer Questions Truthfully:
An insurance agent is responsible for asking you the questions that will determine your risk factors category involved in taking a particular policy. These questions may be related to your family’s medical history and your health. Your lifestyle habits might affect your health in the future. For example smoking and some dangerous hobby changes your risk category.
Answer the question with all honesty. If the insurance company finds that you lied on your application, it will limit your family’s right of collecting your benefits. Once you’ve been accepted and acknowledged the life insurance policy, tell your family members about the insurance policy. Want to know more? Contact us and meet our insurance agent in Brampton and Malton now!
It is a way of protecting your family’s financial structure. It provides a hefty payment in the event of your death or on the diagnosis of a terminal illness where death is likely to occur within 12 months.