Life insurance is extremely beneficial and can cover a broad range of needs. It can protect your family from financial loss and struggle, including covering years of mortgage payments after you’re gone.
The money, known as death benefits, works to replace your income and help your family cover financial needs like college, funeral expenses and daily living costs.
In order to help you understand what life events it’s important to have life insurance for, we’ve outlined several of them.
When You Get Married
Many people don’t start to think about getting life insurance until they have children. However, you should begin to think about it when you get married. What would happen if you passed tomorrow? Would your spouse be able to afford their current lifestyle on a single income? Would they be able to pay off any existing debts while covering the monthly bills?
If you’re planning on having kids at some point, you want to get life insurance sooner rather than later. Some companies refuse to issue these policies to pregnant women, and you want to protect your spouse today.
When You Are Stay-At-Home Parent
Just because you stay at home and don’t earn a traditional salary, doesn’t mean you don’t contribute on a financial level to your household. Transportation, childcare, cooking, cleaning, and other household chores are all critical. The replacement value for these services is usually very underrated.
If you have an insurance policy, your family will have the necessary funding needed to preserve their current quality of life.
You Are Married with Kids
Many families need two streams of income to afford their lifestyles. If you were to die, would your family have the income they need to meet all of their monthly financial obligations like paying the mortgage or rent, utilities, and living expenses?
An insurance policy will allow them to start in their current lifestyle, and they can even set aside money for the future. It makes sure that your plans for your family’s future don’t die when you do.
You Have Grown Children
You’ve paid off your mortgage and your kids are through college and grown. Maybe they’re even starting families of their own. You still need insurance. If you passed away, your spouse would still have to deal with covering daily living expenses and funeral expenses.
Could your children include the funeral costs or help out your spouse? Insurance will ensure that your children don’t have to take on the additional financial burden.
You Are a Single Parent
Single parents act as the breadwinner, caregiver, chauffeur, cook, and so much more to your kids. Yet, many single parents don’t have an insurance policy in place, and even more single parents don’t have enough coverage.
With so much responsibility falling squarely on you, it’s essential that you make sure you have enough insurance to protect your children’s future. It can cover college funding, living expenses, and more.
You Are Retired
Depending on how large your estate is, your beneficiaries could have to pay a 45% estate tax when you pass away. An insurance policy payout is immediately available, and your recipients can use it to pay your funeral expenses, estate taxes, and any other debts without having to liquidate their assets.
Proceeds from this type of insurance are also typically income tax-free, and they won’t add more to the estate tax liability if you choose the correct product.
You Are Single with Dependents
Since no one depends on a single person financially, many don’t have this type of insurance. There are exceptions to this. For example, if you provide financial support to a special needs sibling or aging parents.
Maybe you have a lot of debt that you don’t want to burden your family with. If you’re healthy, young, and have a decent family health history, you’ll lock in the best rates. This means you’ll pay less for your insurance policy.
You Own a Business
Life insurance can aid in financial hardships with not only personal matters but your business as well. If you structure this insurance to fund for a buy-sell agreement, the business owners who are left will have the money they need to buy your share of the business at a set price.
What this does is allow the stakeholders or co-owners to get the business while the family gets the money. Should a key employee pass away, they could have insurance payable to the business that allows the owners to work out another arrangement or hire and train a replacement per the original agreement.
What Type Of Life Insurance Is Right For You?
In order to break down which type of insurance is best for you, we’ve created a helpful chart that tells you which insurance is better based on the circumstance.
|Circumstance||How Insurance Can Help||Best Choice|
|Breadwinner||Income replacement that your family can use for daily expenses||Term Life|
|Stay-At-Home Parent||Cover the cost of daily services like childcare||Term Life|
|Divorced/Single Parent||Cover support payments or daily living expenses||Term Life|
|Homeowner with a Mortgage||Cover mortgage payments so the family doesn’t have to move||Term Life|
|Someone with Co-Signed Debt||Cover the cost of debt payments||Term Life|
|Business Owner||Cover debt costs, allow co-owners to buy the business or pay off estate taxes||Term or Permanent Life|
How to Choose An Insurance Policy
Now that you know why and when you want to think about this insurance, you have to decide how much you need. It’s relatively straightforward to do this with the following steps:
- Multiply your annual income amount by the years you want your policy to pay.
- Add in fixed expenses like mortgages or college funds.
- Take out any non-retirement savings or investments you have.
Following these steps will give you a good idea of the amount you need. You can take this estimate and start shopping around for different policies. Ideally, you want to compare several different ones. This will ensure you get the best rate and the most coverage possible.
Contact Us For Life Insurance Policies
At WRS Insurance, we offer comprehensive planning strategies to fit your interests. We offer products and services from several carriers.
If you’re considering signing up for one of these insurance plans, we can help. Browse our policies and reach out with any questions or concerns you may have.