Life Insurance is something that we should all be thinking about, however very few really do. Sometimes it may be due to finances. Paying monthly premiums might not fit everyone’s budget. It might be the fact that just the thought of insurance makes some squeamish. Either it reminds them of their own mortality, or possibly that they have little faith in Insurance companies and/or insurance sales people.
However, everyone should have life insurance. It’s a fact of life that we’re not always going to be around. We will all pass on sooner or later. Not all of us will get to live to the ripe old age of 100 with a good-sized savings account.
It’s also a fact of life that circumstances can change very drastically and very unexpectedly over the course of anyone’s life. None of us can foresee the future, nor do our plans always go accordingly to what we set them out to be. There could be an unexpected illness, an accident just waiting around the corner, a sudden and unforeseen death.
Unfortunately, death doesn’t come with old age for everyone. These are events that can surely deplete one’s bank account, leaving surviving family members in a financial strain, if they are not well prepared in advance.
Many people don’t even want to think about such things as life insurance. Often, they think they’re young and healthy and don’t need to be considering old age, let alone death, just yet. They think they have plenty of time. Some might even think that life insurance is a morbid topic, so decide to just put it out of mind completely.
That aside, it’s always better to try and be prepared for life’s incidentals as best we can, and that would include having adequate life insurance. This is not to say one needs to be insured to the maximum, especially if your finances don’t allow for it. Even a small insurance policy is better than none at all, possibly just enough to cover the cost of a funeral.
ADVANTAGES TO HAVING LIFE INSURANCE
* In the event of a sudden, unexpected death, our families won’t be burdened with the added expense of a funeral. They can cost between $8,000 to $10,000, and that just includes the very basic funeral plan these days. Most families do not have that kind of extra money saved up.
* If a family does have some savings, it might have been for the children’s education fund or other important future plans. By having insurance, that money doesn’t have to be touched in order to bury a loved one, should the circumstance arise.
* Insurance can help to pay down some bills, especially if the person who just passed away was the higher income earner in the family. When that income is no longer there, the family can find themselves in a dire financial situation. The insurance is there to help the family get through the crisis until they are able to overcome the grief and get back on their feet.
* Some policies allow for dividends to build up. After several years, they can accumulate to a substantial amount. However, these dividends don’t usually pay out after the person is deceased, so they can be much like tucking money away for a rainy day. You can withdraw on them after a period of time to either help pay some bills or purchase a much needed item. Usually (depending on where you live), these dividends can be tax-free money.
DETERMINING HOW MUCH INSURANCE TO PURCHASE
How does one determine just how much insurance they should have? Many shy away from getting insurance thinking about the high cost of the premiums and whether it’s in their budget. However, no one needs to be “over” insured. Check with your insurance broker to see which policies might suit you, your family and your finances. Every insurance company usually has as a variety of policies to suit every need and income level.
Other things to consider:
* Whom is being insured? Usually a wife can be insured for much less. This is not to say that her life is less valuable, but in most cases, the husband is the higher income earner. Therefore, in the event of his untimely demise, the wife has to consider how much of his income is now lost. If there are still children at home, she will have to consider what it will cost to house, feed and educate them until they are ready to be on their own. The amount of the husband’s insurance policy should reflect those expenses.
* In the event that the wife should pass away first, the husband will have to consider her contributions to the family unit. He may now have to consider paying for the chores that his wife did for free, such as cooking, cleaning, child care and possibly to help cover the loss of her income.
* If a loved one’s death won’t set you back financially, then you might possibly only need a very basic insurance policy to cover the cost of the funeral and a few other minor expenses.
* Try to buy insurance when you ARE fit and healthy. This will help to bring down the monthly premiums. If you’re a non-smoker and/or do not have any health issues (such as diabetes, a heart condition for example), these can bring down the premiums significantly as well.
* Never wait until the last minute, when health issues might arise later in life. This will definitely cause monthly premiums to run a lot higher, if an insurance company will agree to insure you at all.
Most people would feel somewhat morbid when it comes to insuring their children, as if you might be anticipating their death. No one even wants to think about their young children passing away, but it is a good idea to consider at least a small policy, maybe even shortly after their birth. The best time TO insure your children is when they are young and healthy. Their premiums would be considerably lower. Most insurance companies cannot raise the premiums on that particular policy as the child ages, therefore, your child would be able to carry this policy well into their adulthood at the same low rates. They can later decide if they want to expand on the policy when they are older, depending upon their own responsibilities and circumstances in life. But you have at least given them a good start with a policy while they were young.
As well, if the policy you have opened for your child also carries dividends, this will be very beneficial to them as they grow older. They can withdraw on their dividends to help pay for their education, or possibly even their first vehicle.
It is very important for everyone to have a life insurance policy, and keep up with the premiums. We just never know when we’ll really need to rely on it. It will be there to help, especially at a time when you really don’t want to be thinking about money, finances and unforeseen expenses. A life insurance policy gives you and your family the peace of mind that they will not be burdened financially, in the event of an untimely death.