If you have a partner, children, or aging parents who depend on you for financial support, it’s smart to buy life insurance to ensure they have a financial safety net if anything happens to you.
Let’s say, for example, that you and your partner recently bought a house. You borrowed money to pay for the house and now owe monthly payments on your mortgage. When you purchased your mortgage, you probably assumed that both of you would contribute to these mortgage payments. So without you in the picture, your partner may need to make a lot of sacrifices to make these payments. And in the worst-case scenario, he or she could even lose the house. Life insurance is there to make sure this doesn’t happen.
In general, if you’re single and don’t have any children, you probably don’t need life insurance. Why? Because no one is relying on your income to live.
That seems simple enough, but here’s what you may be thinking: “I’m planning to have a family one day. What if my health deteriorates before then? Should I buy life insurance now before it gets too expensive or I get sick and become uninsurable?”
In this case, do you need life insurance? Buying coverage before you actually need it may seem like the best way to plan for the future (and to stop your mind from running through worst-case scenarios at 3:00 a.m.). But the reality is that if you don’t need the coverage today, the money you would spend on insurance premiums could be better used to contribute to retirement savings or build an emergency fund. If you’re someone who avoids risk at all costs, you may disagree with us. However, for most people, our advice is this: save your money for now, and come back to us in a few years when you’re married or have children. In other words, there’s no need to put the cart before the horse.
Additionally, anyone who is no longer making an income (usually those in retirement) or anyone with enough savings to cover their future family expenses doesn’t need life insurance. Remember, life insurance is used to protect those who are financially dependent on you. If you are able to do that already with your savings, then life insurance is not needed.
A 20-year, $500,000 term life insurance policy costs around $35/month for someone in their 30s. For a lot of people, that can be enough coverage to keep their families protected.
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Fortunately, the younger you are, the more affordable your life insurance will probably be. In most cases, it’s smart to lock in a low monthly rate when you’re young because it’ll stay at that price for the entire term of your policy.
At PolicyMe, we’re here to help with this. In just 5 minutes, you can build your customized plan and see how much it will cost. And that’s not all. We’ll also help you compare prices from all the insurers you know. Much simpler, right? Start here.