Life insurance isn’t right for everyone. Whether or not you need a life insurance policy will depend on what stage you are in your life.
If your family - your spouse, your children or even your elderly parents - depends on your income for financial support, you probably need a life insurance policy. Life insurance is designed to replace income lost if you were gone or help cover any expenses your family may incur in the event of your death. If your death would not create financial hardship for anyone else, it might not be the right choice at this time.
So how do you know if a life insurance is right for you? Consider these situations to determine whether or not it’s the right time to take out a policy:
- Single without kids: If you don’t have anyone depending on your income to survive, then you probably don’t need life insurance. Your rates for a life insurance policy may be lower if you’re young and healthy, but it may not be worth the money.
- Married without kids (you earn money equally): If you have no children or dependents, you may need only a little or no life insurance. This is especially true if your spouse earns an equal amount of income as you and could survive on his or her own without your income.
- Married without kids (you’re the breadwinner): On the other hand, if you’re in a one-income marriage, then your spouse is dependent on you for total financial support and the loss of your income would be a catastrophe. Life insurance would be appropriate in this situation.
- Married with kids: Whether or not you’re the sole the breadwinner in the family, if you have dependent children for whom you would want to provide for in the event of your death, life insurance is the right choice. Even if your spouse is the income-earner in the household, you may still want to consider life insurance for both you and your partner. This is especially true if your spouse would incur significant childcare costs in the event of your death.
- Elderly, dependent parents: Your choice of whether or not to take out a life insurance policy will depend on your financial commitment to your parents. If your parents could not survive financially without your income support, you may want to consider a life insurance policy.