Life Insurance Worth Many people don’t realize the potential financial impact of their death on loved ones. While it might seem morbid to consider, thinking about how much you could be leaving behind for your family after you die is essential to determining whether or not life insurance makes sense for you. The answer, however, may depend on the type of policy you purchase, as well as your current and future life circumstances.
The main reasons to get life insurance include covering final expenses, replacing lost income and reducing the amount of debt your family must pay in the event of your death. For young people with children, a death benefit can also provide an inheritance for your children or be used to help pay down student loans. Other benefits of life insurance include covering mortgage or other debts, paying for childcare and creating an estate plan that allows you to leave assets tax-free to your beneficiaries.
For these purposes, a term life insurance policy is the best choice because it provides affordable coverage that lasts only for a specific period of time and typically comes with few restrictions or fees. Whole life policies, on the other hand, cost more, but they offer permanent coverage and build cash value that you can borrow against or use to cover medical expenses.
Generally speaking, most people who need life insurance will find the premiums are worth it because they usually cost significantly less than the amount of money your beneficiaries would receive in the event of your death. For example, a healthy 35-year-old can expect to pay around $25 a month for a $2,000,000 policy that will last 20 years.
The amount of money your family can expect to receive in the event of your death is often far greater than the cost of a policy, even when you choose to customize a policy with added riders. A common rider, for instance, is long-term care coverage, which can provide you with additional funds if you require hospitalization or nursing home care.
As a result, if you are in the early stages of your career and have young children or an outstanding mortgage, you should consider getting life insurance because it can provide you with peace of mind knowing that you will have enough money to cover your expenses after your death. However, if you don’t have dependents or a significant debt and you have substantial savings stashed away, you may be able to forego life insurance in favor of other investments or retirement planning goals. In this case, you should consult with a financial planner to ensure that forgoing life insurance will not have any negative financial repercussions.