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Life insurance pays out cash to the beneficiaries of the policy, called a death benefit. It can help replace lost income, cover funeral costs, fund a college education and much more.
Here are several scenarios that help further define who needs life insurance.
You shouldn’t wait until you have children to get life insurance. If you’re married, you still need it. If one of you were to pass, could you get on without that second income? How would you pay off credit card debt, car loans and student loans – or things like your mortgage or rent and utilities?
This is definitely the time for life insurance, whether you depend on two incomes or one. Losing that critical income would put a financial burden on most families. Could your family continue with the same standard of living on one income? Would your children be able to attend college? With life insurance, your family can maintain their financial expectations and future plans.
Single parents wear all the hats in the household, acting as the doer of laundry, chauffeur, cook, breadwinner and more. Without life insurance, your family could really struggle when you’re gone, precisely because you play so many key roles for the family. Safeguard your family’s future with life insurance and get peace of mind that they’ll be well taken care of.
If one spouse stays at home with the kids, your household can still be significantly impacted by his or her loss. Replacing all of the tasks the stay-at-home parent does can be very costly. And it’s easy to underestimate their value and expense. Life insurance can ensure that your family is cared for in the event that a parent passes.
At this stage of life, insurance is still a valuable tool to ensure your spouse can maintain his or her standard of living – even if your mortgage is paid off and your kids have graduated from college. The policy can help pay for daily living expenses, as well as other factors.
After you die, your estate tax payment could be as high as 45 percent, depending on your estate. Since life insurance policy proceed are paid out immediately, your heirs can take care of taxes like these, funeral expenses and other debts – without having to dip into savings or investments.
Life insurance doesn’t just protect your family. The policy extends to your business, too. If a key employee or you, the owner, died, how would your business fare? With life insurance, you can fund a buy-sell agreement, ensuring that the remaining stakeholders would have access the funds to buy the company and keep it going. With key person insurance, your company will receive a payout from the policy in the event that a “key” employee dies. It’ll give you the flexibility you need to get a replacement employee.
Single people generally don’t need life insurance – as long as you don’t have any dependents. You should get life insurance, however, if you care for a sibling with special needs or support your aging parents. In addition, it’s smart to invest in life insurance when you’re single, young and/or healthy, because you’ll be insurable and get the best rates.
Life insurance is a benefit, no matter what stage of life you’re in. Talk to a local insurance professional about how much life insurance you need and what kind of policy will meet your budget.
Do you see the value of life insurance for your stage of life?