Does Everyone Need Life Insurance?

Funeral and Burial Expenses

When considering life insurance, don’t forget about the cost of a funeral. Depending on your wishes, the average funeral costs between $7,000 and $12,000. Will this amount be a financial burden on someone you love? Don’t forget to figure in funeral and burial costs when applying for life insurance.

» Calculate: Life insurance needs calculator

Who doesn’t need life insurance?

If no one relies on you financially and if you have no debt that would become someone else’s responsibility, then it may not be necessary. You may find that it makes more sense to invest in stocks, bonds, savings and retirement accounts.

Keep in mind, however, that the cost of buying a policy only increases as you age. So, if you believe you may need life insurance in the future, it may be prudent to purchase sooner rather than later.

What are the different kinds of life insurance?

Term Life Insurance

Term life insurance is the most affordable life insurance option for families. The coverage lasts a specific period of time, called a term. These terms range from 5 to 40 years, availability depending on your age.

If the insured person dies within that term, the life insurance company pays the coverage amount (the death benefit) to the beneficiaries of the policy. Even if you die one day after the policy is activated, the life insurance company still pays the FULL death benefit. However, the insurance company is allowed to investigate the claim if the insured dies within the first two years of policy activation.

Permanent Life Insurance

Permanent life insurance contains many different policy options. The most common are whole life insurance, universal life insurance, and guaranteed life insurance.

All permanent life insurance policies are designed to last until you die. Depending on the type of permanent policy, there also may be a cash value accumulation component and it may pay dividends. Because of the extra beneficial features of permanent life insurance, it’s often 10-20 times more expensive than a term life insurance policy with the same coverage amount.

Employer-Sponsored Life Insurance

You may have life insurance as part of a benefits package through your job. This group life insurance is likely term life insurance, accidental death and dismemberment life insurance, or a mix of both.

Group term life insurance typically caps at $50,000 and it’s not yours to take with you if you leave the company. Your employer may pay the premiums on this coverage—so it’s a nice benefit—but if you have a family, it’s important to buy your own individual term life insurance in addition.

Accidental death and dismemberment insurance (also known as AD&D) is another common form of employer-sponsored life insurance. This type of coverage pays a death benefit if the insured dies as a result of an accident only. For example, it would pay out for death resulting from falling off a ladder, but not cancer. It also pays out a portion of the benefit if the insured is dismembered in an accident. For example, if the insured lost a foot in a boating accident the policy pays out a certain percentage of the benefit, like 50%.

Reasons for Owning Life Insurance

Each of the different types of people described above have a need for life insurance. Life insurance was created mainly to be used as income replacement, but the product provides other benefits as well.

Life insurance can help:

cover burial and other final expenses
pay off the mortgage
transfer wealth or leave an inheritance
pay for home care expenses
supplement retirement income
pay for estate taxes or create estate liquidity
provide college fund for children
business strategies
a charity

After reading about the different types of people who need life insurance and reasons as to why people purchase it, is life insurance something that could benefit you? If you answered yes, get a term life insurance quote to see how little it may cost to get coverage. Unlike many online life insurance quoting engines, we don’t ask for any personal information upfront.

Term life insurance is simple, affordable, and customizable. Quotacy searches across the nation’s top insurance carriers to find the plan that fits your needs, time frame, and budget, and we will be there for you every step of the way ensuring the process is as smooth as possible. Apply for life insurance today.