Life insurance is one of the best ways to reduce the potential financial burden that your loved ones may face in the event of a tragedy. The amount of coverage needed is different for every person, and only you can determine how much coverage your loved ones would need based on your lifestyle and needs. A good life insurance policy takes all these factors into account to make sure that you and your loved ones are protected.
Of course, a “good” life insurance policy means something different to everyone. Today, there are many types of life insurance policies, including traditional term and permanent, along with the growing-in-popularity no exam life insurance. You can read all about the different types of life insurance here.
Who Needs Life Insurance?
If you’re not sure which type of life insurance is for you, read on to discover several common reasons that people buy it, along with the types they buy. If you identify with one of these groups, you’ll get a clearer idea of which direction you should head in.
Parents
Many people first start thinking about life insurance upon the birth of their first child. This is a good move. Having children comes with responsibility, and life insurance is a way to make sure you can provide for them even if you’re not physically there. However, even if you didn’t buy life insurance when your first child was born, that doesn’t mean it’s too late. Even older kids and teens need coverage if something happens to you.
Many parents with a moderate income choose term life insurance, which lasts for a certain amount of years, or term. The length of your term will depend on how old your children are when you buy the policy. Parents of younger kids will probably opt for a longer term while parents of teens may only opt for a term of 5-10 years. Many parents set milestones for which they need coverage and thus determine how long of a term they need. Milestones can be when a child reaches a certain age, graduates college, or when all their debt is paid off.
Another good choice for parents is whole life insurance, which doesn’t have an expiration date and also acts as an investment vehicle. The only downside to whole insurance is that it costs more than term, which is why it is less popular.
Stay-At-Home Parents
Many people think that only working parents need life insurance, but the fact is that life insurance is essential for stay-at-home parents as well. This is because stay-at-home parents are often responsible for the majority of family/household chores, like school drop-off and pick-up, cooking, cleaning, doing laundry, helping with homework, etc. Because the stay-at-home parent is doing all of this, the family doesn’t need to pay for outside help. If, however, the stay-at-home parent dies unexpectedly, all of these chores will need to be outsourced to workers who need to be paid. The parent who is working will usually not be able to continue to work and take care of all the family/household responsibilities.
Since this situation is similar to the one above, term and whole life insurance are good options.
Freelancers
If you are a freelancer who doesn’t get life insurance through your employer, getting life insurance on your own is a good idea. If you have kids, the reasons above apply. But even if you don’t have kids, getting a small life insurance policy can help cover end-of-life expenses like funeral and burial costs, which can reach into the thousands. There are many types of life insurance that you can get specifically for funeral expenses, including term and no exam life insurance. Life insurance policies that are only for funeral costs tend to be less expensive than those that have greater coverage.
Business Owners
There are many reasons for business owners to get life insurance. Like freelancers, they may not have life insurance through their employers (their own businesses). Additionally, business owners are crucial to the success of their companies, which means that if something happens to them, they want to make sure that the business can stay afloat. Key-person life insurance and a buy-sell agreement funded by life insurance are two popular options for business owners since they are specifically designed to help partners save or sell the business.
Another reason why a business owner might need life insurance is to secure a loan. In this case, no exam life insurance is a good bet. No exam life insurance doesn’t require a medical exam, which means approval is quick and easy. It’s a good choice when time is of the essence. If you’re a business owner and not sure which type of life insurance is best for you, you can contact the experts at Sproutt.com for assistance. Sproutt insurance advisors are not affiliated with any specific insurance company, so their only bias is to get consumers the life insurance policy that’s best for them.
Home Owners
Many people who own homes opt for life insurance since it can offer coverage for mortgage payments in the event that they die unexpectedly. The insurance prevents the debt from passing on to spouses, partners, children, or other family members.
In this case, term life insurance is a good option, and once you sign your mortgage, you’ll have an exact idea of how long you need the term to be. Some banks push Mortgage Protection Life Insurance, but this type of insurance usually offers higher premiums than term and has less flexibility.
Protection For Loved Ones
As you can see, people buy life insurance for many different reasons. The one underlying commonality is that they all buy it so that the important people in their lives can be protected.
