Life insurance. A lot of us don’t like to think about it, or think we don’t need it, because hey, I’m not planning on dying anytime soon, are you? But it’s certainly something we all should think about.
So what is life insurance, anyway? If you have a life insurance policy, when you die, the beneficiaries of the policy are paid the amount of the policy. That money can be used for anything, no restrictions.
Obviously, if you’re married or have children, you can see where this benefit would be useful. If your spouse is suddenly without your income, that could put them in a precarious financial situation, and a life insurance payout would help. A life insurance payout could be used to help send your children to college. It would also cover the costs of your funeral.
But what if you’re not married and don’t have children? Is a life insurance policy worth it then?
Well, it depends.
Are you planning to leave anything to friends or family members? Just because you don’t have kids of your own doesn’t mean that you don’t have kids in your life that you would like to provide for. Or maybe you would just like to leave some money to your friends. Maybe you want your group of friends to all take a vacation in your honor in the event of your untimely demise. Life insurance could help with all of this.
What kind of debt do you have? When you die, your estate is responsible for your debt. That means that whatever assets you have will be used to pay off your creditors. If you have more debt than you have assets, some of those debts will be written off, but not all of them. Most importantly, do you have any joint debt? Did your parents cosign for your student loans, for example? If so, then your student loan debt won’t go away when you die, and your parents will be responsible for it. The same goes for any joint loans you may have signed with someone.
Speaking of your parents, how is their retirement planning going? Is there a chance that you will have to help them out financially in their later years? If so, a life insurance plan could greatly help them out if you aren’t around to do so.
You may also want to consider a policy with a Living Benefit. If you get a diagnosis of a terminal illness and have less than a year to live, a living benefits policy will allow a payout to you while you’re still alive, which can help pay for medical care not covered by your insurance and other needs during the last months of your life.
If none of these situations apply to you, then you might not need a life insurance policy after all. But I still think it’s something worth looking into. There are policies of all different sizes, and maybe a small one at a low cost could provide you with some added peace of mind.
Through my job, I have a small life insurance policy. We recently had the opportunity to elect higher options, and after running the numbers, I realized that I don’t need any additional funds, but if something happens to me, I’m sure my family will appreciate that payout to help as they settle my estate. And throw a wild party for my wake, of course.
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