If you have dependents, you will probably be worried about their financial needs in case something happens to you in the future. What if you have old parents who have no other means of income and depend fully on you? What if there are young children in the family and there are decades to go before they become independent? What if your spouse is not skilled or educated enough to get a job after your death?
Well, these are the common reasons why people take life insurance. But there’s much more that comes into play if you want to decide whether to buy a policy now or later. In fact, there are some life phases when you really need to consider a life cover. These phases often lead to life-changing decisions and you have no choice but to be responsible for protecting your loved ones. Here are some common situations that impact your life insurance needs.
Marriage is a major event that changes your life emotionally and financially. Financial obligations are no longer confined only to you but become a collaborative effort. If one of the spouses unfortunately dies, a life insurance policy ensures financial stability for the surviving spouse so that they can maintain the current standard of living. Getting a life insurance policy becomes even more important if you are the breadwinner of the family.
Having a child
When you have children, your responsibilities increase because they will probably depend on you for years to come. Getting a life insurance policy in this situation does not remain a choice. In fact, both parents should have adequate insurance if the children are young. The coverage needs to be enough to fulfill everyday living expenses, pay for daycare and fund college education for your children.
Getting a divorce
While getting married and having a family is good reasons to get life insurance, you must be more serious about your policy if you are getting divorced. You will probably have a policy already because most married people do. However, this is the time to make decisions regarding the beneficiaries of the policy. If you don’t have children, things will be simple as you just need to change the beneficiary. But things get tricky if you have kids. The idea should be to ensure that they are provided for if you die. If you don’t have a policy, you should take one and name the children as beneficiaries.
Starting a business
Another major life event when getting insured makes sense is setting up a business. Even before you establish a startup (or already have a running business), you should consider life insurance as a priority. The best thing to do is to check out this site and compare your options to find one that works for you. Have at least enough coverage to pay off your business debts so that your family is not accountable for them if you die. You may have enough assets but a life cover prevents the need for asset liquidation to pay your outstanding debts.
Having a major mortgage or liability is another reason why life insurance makes a smart idea because you would not want your spouse to be burdened with your owing. Therefore, your beneficiaries must get enough cover to pay off the loan amount if you die. The best thing to do is to find a policy that suits your needs in terms of mortgage coverage.
Another key life event when you should consider life insurance is impending retirement. Essentially, a permanent life insurance policy serves as a great retirement planning tool as it offers the benefit of cash accumulation. So if you take one well in time, you will probably have enough funds for a secure retirement. Moreover, you get the benefit of tax savings with this form of investment for retirement planning.
A life insurance policy can serve as a smart tax-saving tool if you want to protect your estate from being taxed heavily. Your heirs can use life insurance to pay off estate taxes after your death, which can increase the inheritance value they get. Further, life insurance can also provide immediate cash for paying off the outstanding medical payments (for the last illness before death), burial expenses and other settlement costs.
Getting insured is a smart move, whether you are young or old. It is all the more critical if you have people who depend on you for financial support. Moreover, these are the life events when you must absolutely consider taking up a policy if you don’t have one already!