Have you been considering purchasing life insurance, but you’re not sure if it’s for you or not? Let’s take a look at the pros of having life insurance coverage.
An unexpected death can place financial stress on those who may depend on you financially. Life insurance coverage can help them pay the bills and other living expenses if this does occur. They’ll be provided a lump sum payment when you pass away.
The money goes to the people you nominate as beneficiaries of the policy. Life insurance coverage might also come with a terminal illness coverage rider. This pays out if you’re diagnosed with a terminal illness with a limited life expectancy.
Accidental death insurance is different from life insurance coverage. It will only pay out if you die from an accident. It will not provide coverage if you die from an illness, disease, or suicide. In addition, this type of coverage often has a lot of exclusions.
Who Should Consider Purchasing Life Insurance?
Couples
Couples who have built a life together should have life insurance if one of them passes away. This way, the other person can maintain the same quality of life. For example, you and your significant other may have planned a life based on a certain income level.
Unless each of you can maintain that income level on your own, it’s essential to have life insurance to prevent a dramatic change of lifestyle when one of you dies. Unfortunately, this is still the case even when you’re both still employed and holding stable jobs.
You may want or need to take an extended break from work following the death of your loved one. Life insurance affords that chance to grieve or readjust to new life circumstances.
Mortgage Holders
Homeowners should take out life insurance so the policy proceeds can pay the mortgage. A home mortgage is one of the most significant assets and liabilities that a person will generally have.
If a homeowner dies before the mortgage is paid off, beneficiaries and the lender can be protected by the proceeds of a life insurance policy. The lender wants to know if someone can cover the mortgage payment. You certainly don’t want to worry about having to make house payments and being worried about being forced out of your home while grieving.
Parents Of Minors
Life insurance provides money to surviving spouses or guardians and children for income replacement or debt pay-off, which allows the family to maintain their current lifestyle.
Parents wanting to provide for their children’s college education in the event of their passing should consider that expense when determining the amount of life insurance to purchase.
It’s often hard to gauge how much cover you should get as it’s not something we often think about, and putting a monetary value on living expenses is quite tricky. However, there are two ways to look at it:
- Need: to pay the mortgage, credit card and other debts, child care, school fees, and ongoing living expenses.
- Receive: from super, savings, the sale of any investments, your paid leave balance, and support from your extended family.
The difference between these is the amount of coverage you should get.
Give your provider as much information as possible to get the most out of your life insurance. The more information, the better. Some questions they may ask include:
- Age
- Job
- Medical history
- Family medical history, i.e history of heart disease, cancer etc
- Lifestyle, ie. heavy smoker, drinker etc
- High-risk sports or hobbies ie. skydiving, base jumping etc.
But what if I’m single and don’t have any family? Do I still need life insurance? It’s a question we get asked quite often, and it’s reasonable. But, in this case, life insurance might not be your best option.
However, you may want to consider buying a cheap term life policy if you have debt that won’t be forgiven upon death, such as any private student loans you may have.
If you need to book a paramedical exam for your life insurance policy contact us here
