Why life insurance is important
We don’t really like to think about death. Preparing for your own death seems like a real disappointing way to spend an afternoon. However, life insurance is one of those things that is important. You never know what is going to happen next, and you can’t guarantee that an unexpected accident or illness won’t result in your death.
Because I feel strongly about the importance of life insurance, I’m joining theLife Insurance Movementstarted by Jeff Rose, the owner of Good Financial Cents. Because studies show that millions of people are inadequately covered by life insurance, it’s important to raise awareness and encourage families to look into life insurance and get the coverage they need.
Life insurance for the primary income earner
Life insurance is especially important if you are the primary breadwinner in your family. What would happen to your family if the primary source of income was suddenly gone? What would your family do? Would your life partner have to work harder to make up the difference? Who would take care of your children?
When you have life insurance, some of the pressure is off your family. Life insurance can bridge the gap, providing your family with the resources for financial stability. Consider: The death of a primary breadwinner can mean hundreds of thousands of dollars in lost income over the next few years. Your life insurance policy should provide a benefit that pays out enough for your family to cover expenses during the time that you would have been working to bring in that income.
Your family depends on you to provide, and one of the best ways to provide, even in the event of your death, is to purchase life insurance.
Life insurance for a low income partner
It’s also important to realise that life insurance isn’t just about replacing the income lost from a primary breadwinner. If your life partner has a part-time job, or stays at home without working a traditional job at all, that doesn’t mean that his or her life shouldn’t be insured.
You might be surprised at the work that your partner does. If your partner has a part-time job, think about what you do with that income. You’ll want to replace that supplementary income if your partner passes on. But, even if your partner doesn’t have a part-time job, you need to think about the consequences of not having him or her around. What tasks does your partner perform? Some of those tasks might include cooking, cleaning, child care, and more. If your partner passes on, these services, which may not cost you money right now, will have to be done by you, or you will have to pay someone else to do them.
Don’t forget to take that into consideration. Your partner should have a policy as well, so that you have a little less to worry about in the aftermath of a death.
Life insurance is vital for any family. The life insurance premiums you pay provide protection for family finances, and it also offers peace of mind. It’s a safety net, and a way to ensure that you don’t have to worry about money during a time that is already trying enough.
Great article. In terms of insurance on a stay at home parent, your point about having some insurance on them as well is bang on.
I’ve also seen clients who decided that if the stay at home parent should pass away, that the ‘working outside the house’ parent would quit work and raise the kids. If that’s the case, then the stay at home parent needs as much insurance as the ‘working’ parent, because if they die, you lose the working parent’s income.
What is also important is to work with a financial planner that will help you obtain the right type of insurance at a cost that fits your budget at an amount that your needs require and NOT just get sold a policy by a sales person.
Hi Tom. I agree that people don’t really like to think about death, and that this a clear factor in many people’s apprehension to sort out their life insurance plan. The flip side is the feeling people typically get from finalizing their life insurance policy. Knowing that you have gone out of your way to secure your families future is a drastically under-rated feeling.