Life insurance is designed to protect your loved ones if something happens to you. It is considered necessary when you have to support the family and usually this means spouse and children. Basically the use and reason of a life insurance is to substitute the economic facilities that you provide, such as your salary, work, care, etc.
Regardless of how you want to call this protection, life insurance is simply that, an economic protection for loved ones and should be considered practically only when there is a need to take care of the family.
If you are single and your parents and siblings take care of themselves, you may not need it. But if you are the only earner with the responsibility of providing for your spouse and children, it is a good idea to get a policy.
But this is not the only reason why it may be imperative that you keep your current life insurance. There are other reasons why you may want coverage even when your children are no longer dependent, as they may not be the only ones financially dependent.
Here are the top five reasons why you should consider taking life insurance coverage seriously:
1. Financing Your Child’s Education
- Life insurance could prove essential in helpingyour family finish the job of financing your child’s university education and may prevent them from dropping out of school. Sadly it is common that at the time of the death of a parent the son usually leaves, even temporarily.
The event of the death of the principal provider of a family is more than the loss of the family’s daily income, in many cases it means the loss of credit or the emergency funds of the family. Income from life insurance may be used to replace an exhausted emergency fund, or to prevent the family from entering into debt, or to eliminate the existence of such funds.
2. Financing For Your Dependents
- Life insurance can provide the necessary funds to support other dependents of the family such as grandparents or disabled family members, in addition to the surviving spouse.The financial situation of the survivor could be very difficult. Statistics indicate that 20% of widowed women in the US between the ages of 51 and 64 live in poverty.Having life insurance could provide a better quality of life for the surviving spouse, either because your spouse may not need to depend solely on Social Security retirement income or because it complements the loss partially.
3. Financing during Your Spouse’s Retirement Period
- Life insurance can also supply the necessary funds for the spouse during the period of retirement. This period is the time when usually the youngest child reaches the age of 18 and the widow (or widower) reaches an age at which they can apply for the retirement benefits or of widowhood. Since 60 is the minimum eligible age for that, your spouse’ Social Security does not provide any benefit during that time period.
- In an instance wherethe person was the sole bread earner and in active employment at the time of death, the surviving spouse could obtain a retirement pension when he/she reaches the appropriate age. But the pension could be much lower than if the person had repealed life insurance before dying. The benefits of life insurance can actually be used to compensate for reduced pensions.
4. Financing Future Investment
- Just as an early death can cause a smaller Social Security pension, it is quite possible that it also truncates the family’s efforts to save such as contributions to a SAR account. The benefits of life insurance could be used to provide funds for investment in case of a surviving spouse’ future retirement.
- In the case of a retired couple, life insurance benefits can cover the income that the couple will not receive due to the death of one of the spouses, which generally means a reduction of 33% in the amount of the pension.
5.Financing Burial and Other Immediate Expenses
A life insurance can also replace the regular income of the particular family. Today it is common to see families where both spouses work and provide two salaries. If one wage goes absent, there is a chance that there would not be enough to meet expenses fully. An immediate benefit of life insurance is to deal with the inevitable funeral and burial expenses and the final medical expenses, as well as property transfer expenses, administration or inheritance tax payments.
