We all think we’re invincible and will never have need for life insurance. It’s understandable as no one likes to think about passing, but life insurance is a vital tool to provide for your family. While the reasons may vary, many families need life insurance.
Despite this reality, many Americans fail to have adequate life insurance coverage. The 2017 Insurance Barometer Study, sponsored by LIMRA and Life Happens, reveals that 41 percent of Americans don’t have coverage – even if they believe they have need. If you’re debating whether or not you need life insurance, here’s why you should consider coverage.
Who Needs Life Insurance?
There’s no walk of life or profession that is exempt from life insurance. Simply having financial obligations reveals a need for life insurance. “Anyone who has present or future financial obligations should consider life insurance,” says Annise Henson, Manager, Product and Market Development at Unum. This covers a broad spectrum of individuals, such as:
• Stay-at-home parents
• Homeowners with a mortgage
• Business owners
• Co-signers on debt
• High net worth individuals
• Parents of a special needs child
As is obvious, it’s a broad market. According to Henson, “If your assets and investments won’t cover all your current and future financial obligations, however, then life insurance will be necessary to help your family manage day-to-day and into the future.” It is clear that the sentiment knows no boundary – you can be in virtually any situation and face the reality of being unable to cover future financial obligations. In that case, life insurance is a key tool to bridge the gap.
When Should I Consider Buying Coverage?
It can be confusing to know when to buy life insurance. You may be a single individual, or a business owner and think you do not need coverage. The truth is if you’re asking “Do I need life insurance?” it may be time to consider securing coverage.
Just remember, however, each situation is different. “Life insurance is not a one-size-fits-all benefit. So understanding the types of coverage that are available, and when they’re important, can be daunting,” says Henson. Don’t let that feeling hold you back from getting coverage.
There are resources available to help guide you through not only the life insurance decision but also what type of coverage you need. Remember, the younger you are when you buy coverage, the cheaper it is, saving you more money while still providing the protection you need.
Can I Ignore Life Insurance?
Putting off buying life insurance, regardless of your situation, may seem harmless. You may view yourself as healthy, or as having no real responsibilities to care for if you were to experience an untimely death.
Unfortunately, this may very well put your family at risk if you were to pass. Life insurance proceeds can be used to cover many needs, from replacing income to paying for your children to go to college to paying off high-interest debt.
Alternatively, Henson points out that if you have the assets and investments needed to cover all your responsibilities, you may not need life insurance. However, this is not a decision to take lightly or go into blindly.
You may very well find that you don’t need life insurance, but you can only answer that after reviewing your needs and situation. In fact, 30 percent of Americans know they need more coverage, according to LIMRA, so it pays to handle your situation with thought and research.
Overlooked Benefits of Life Insurance
Many know the ultimate purpose of life insurance – to provide funds to your family upon your passing. This is a much-needed benefit in a dire time, but that benefit barely scratches the surface of what life insurance can provide. There are many overlooked benefits to life insurance you may not be aware of, such as:
• Tax-Free money. Life insurance proceeds are a tax-free benefit, so your family doesn’t have to worry about tax implications upon receiving the payout.
• Locking of premiums. This is of particular importance to whole life policies. As long as you continue to pay premiums, they will never change.
• Mortgage protection. If you have a mortgage, some term life policies offer riders to pay off the mortgage upon your passing.
• Long-term care riders. If you choose this option, you can use this rider to pay towards long-term care services.
• Cash value. This is not found with every type of life insurance, but some permanent plans build cash value that you can access for a loan.
• Business succession. This is of particular importance to the business owner, but life insurance can be used as a tool to protect businesses against the untimely death of an executive.
Depending on the type of policy or rider you select, there may be other less common benefits to life insurance. Even if you have a unique need, it’s possible it can be met with the proper life insurance policy.
Knowing who needs life insurance isn’t always clear, but with a little thought, it’s easy to see that many do need coverage to protect those they love.