Do I need life insurance?
- 2 Minutes To Read
Who needs life insurance?
Life insurance is essential if you have a partner, children, ageing parents or any other loved ones who depend on you for financial support. It could be the difference between your family being able to keep their house & pay their day-to-day expenses vs. dealing with a huge financial burden if something were to happen to you. That doesn’t mean everybody needs life insurance, many people actually don't require life insurance at this time!
At what age should I be buying life insurance?
There’s no right age or year to get life insurance – it’s not something that you’ll need to open on your 30th birthday. The best time to get life insurance depends on where you are in life. You’ll want to buy life insurance when you get to the point that you have somebody depending on you. For most people, this is when they get married or when they start having kids.
At this point, you might be thinking, “I just got a mortgage, and having kids isn’t cheap! How am I supposed to afford life insurance?" Fortunately, the younger you are, the more affordable your life insurance will probably be. In most cases, it’s smart to lock in a low monthly rate when you’re young because it’ll stay at that price for the entire term of your policy.
What things can life insurance be used for?
Your children's expenses until they reach an age of independence
Kids are the first thing most people think about when buying life insurance. It makes sense that parents want to be sure that their kids will be safe and that their expenses (for example, shelter, food, and clothing) will be covered if anything happened to them. That’s why having kids is usually what prompts people to buy life insurance in the first place.
Your partner’s expenses for as long as they need it (even through retirement)
Most couples save for retirement together. This means both you and your partner put your income towards having the money you need to live a happy retirement.
But if you die, your spouse may have to put most of their monthly earnings towards paying bills, which will leave less money to save for retirement. It’s easy to believe that if you’re no longer alive, your family’s expenses will drop dramatically. But the reality is that many expenses in a marriage don’t decrease by 50% with the loss of one income earner. These include your mortgage payments, property tax, children’s expenses, and much more.
Your life insurance should protect against this loss in retirement savings. In other words, it should ensure that your spouse can still live the retirement they had hoped for if you are no longer around.
Any outstanding debts
It’s important to remember that leaving your family with outstanding debts (like a mortgage) can be a big burden on them. After all, most couples take on a mortgage believing that both people will help make monthly payments. So if your income vanishes overnight, your family may be forced to move.
Any unique needs you have (your child’s education costs, elder dependents, etc.)
Good life insurance advice should also consider any unique needs you have. For example, maybe you’re covering the cost of a caregiver for an aging parent. Or maybe you want to support your kid through their undergraduate program in university. If your current income allows you to cover these expenses, your life insurance should too.