Most people choose to leave an amount of money to their heirs when they die. However, you may be questioning if life insurance is the best option or if another financial policy would be more appropriate.
According to LIMRA’s annual Life Insurance Barometer Study, more than half of Americans depend on two incomes. Moreover, 42% of households face financial hardship within six months after losing one income provider. Thus, if the loss of a single-family member would leave the rest of your family financially exposed in the case of your death, life insurance may be a wise choice.
The assurance that your loved ones or business companions will be taken care of in the event of your death can be reassuring for parents, business owners, and even students with outstanding student debts.
When Is Life Insurance Beneficial?
The best time to purchase life insurance is when you’re young and healthy. Consider purchasing life insurance if you know your sudden passing could leave your loved ones in financial distress.
Let’s look at the most likely financial consequences of your death and who needs a life insurance policy:
People With A Successor For Their Property
In the event of your death, your mortgage debts would still be owed. Cosigners, joint owners, spouses in community property jurisdictions like California and Texas, and executors of your estate who didn’t follow probate regulations may all be held responsible for your debts. However, if you have life insurance, your death benefits can help pay off your mortgages.
People Who Have A Partner Dependent On Their Income
Suppose you have a partner or spouse who is entirely reliant on your finances to get by each and every month. Assuming you’re in a committed relationship, the loss of your salary could have a terrible effect on your partner’s financial situation.
People With Children Dependent On Their Income
The USDA estimates that raising children from birth to age 17 costs $233,610. Minors, who cannot support themselves, suffer immensely if you cannot support them. They rely on you to help pay for education or assistance for a disability. Hence, your financial well-being is critical to your children.
Life insurance may be beneficial as it can provide a stable form of income replacement, especially if you have kids who require food, shelter, clothes, and education after you pass away.
People With Heirs Under Debt
Taxes on your estate will have to be paid by your beneficiaries after you die. A large enough estate could result in an estate tax for your heirs following your death, which may be beyond their ability to pay. This is where your death benefit can come into play, as it can offer protection for estates through an estate protection rider.
The people you work with are dependent on your actions as a business owner. After your death, your beneficiaries may be able to use your life insurance proceeds to keep your business afloat.
Anyone With No Savings
The cost of your funeral would be a burden on your family and loved ones. In 2021, the average funeral and burial expenses were $7,848, according to the National Funeral Directors Association. The average cost of cremation and funeral service was $6,971. The price of your funeral may increase if you specify your preferences in advance. Life insurance can help cover these expenses.
Retirement is a great time to unwind, especially for people who have paid off their mortgage and have the means to live out the rest of their years comfortably. However, you may still require life insurance to safeguard your heirs. Consider the scenarios below:
- A life insurance policy could help your family pay for estate taxes and other expenditures related to your death, such as burial expenses.
- A life insurance policy can allow retirees to spend and enjoy their assets while knowing that their children would be provided for in the event of their death.
- Retirees could use life insurance to ensure that each heir receives a fair share of their estate.
What Kind Of Insurance Do You Require?
Since no two families have the same situation, you must consider your unique circumstances when determining the quantity of your life insurance coverage. To begin, make a list of all the expenditures your beneficiary (usually a spouse) will face in the years after your death. If you’re married, you’ll also need to consider what your partner will be able to make in the short- and long-term. A life insurance policy’s death benefit can make up for any deficits.
Sign Up For Life Insurance With Matador Today
Life insurance can provide peace of mind by safeguarding your dependents in the event of your death. Signing up for life insurance can be one of the smartest financial moves you make if you have young children or a spouse with limited earning capacity.
Contact the experts at Matador Insurance to discover more about how life insurance can help you in all of these scenarios. Our knowledgeable agents will walk you through each stage of the process, irrespective of your financial circumstances or ambitions. Connect with Matador Insurance online today to begin the application process.