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Why do you need to buy life insurance?

Posted on January 26, 2012 at 5:53 PM Comments comments (289)
Why do you need to buy life insurance?
 
I get strange looks sometimes from friends and family members when they find out I have life insurance for my young children. I know, it does sound a little morbid. No one is saying I am expecting my kids to die young. But, let's stop and think about it. Typically the younger a person is, the less likely they are to develop a serious illness or condition that may prevent them from securing coverage as an adult. Also, the younger you are when the policy is purchase, often the premium is lower. Taking this into account, I think it's a great gift to your loved ones to purchase a whole life policy for each of your children around their first birthday. They may never appreciate it, but someday, someone will. In eighty years $50,000 may not be much, but it should at the very least take the burden off my future grandchildren to pay for final expense. Also, if heaven forbid one of my children did die at a young age, his sibling would have a college fund. Many plans can be paid in full in a short amount of time, so that after a seven year period, there are no more premiums to pay. Something to consider.
 
As for adults, I always say that the time to buy life insurance is now, not later. Even one year in age difference can cost a tremendous amount more in premium. I encourage young parents to consider a thirty year term policy. Often a young parent in good health can secure a $500,000 20 year term policy for roughly $50 a month. Now, in thirty years that policy runs out and there will be nothing to show for it. BUT, if you die while your children are young and dependent upon you, your spouse or child's guardian will have the ability to care for your child(ren) financially.
 
And what about my house? What would you do if your spouse died and you relied on their income to pay your mortgage? Did you know you can purchase mortgage protection insurance? This is basically a life insurance policy written for amount of your current mortgage balance. As the years pass and your mortgage decreases, so does your coverage. In the even you die, your house would be paid for.
 
Some still don't see the value of life insurance. The monthly costs, the fact that you might have to cancel it down the road and walk away with little or no money. Why not set that money aside each month yourself? These are all valid thoughts and sometimes, for some clients, the cost of coverage could outweigh the potential benefit. However, you have to remember, insurance is all about paying for what COULD happen. I sure hope that I don't die within the next 25 years that are left of my term policy and that I don't ever have to see the benefit of one of my sons life insurance proceeds, BUT if it did, I sure would be glad I did chose to purchase coverage.
 
What do you think? Do you and everyone in your family have life insurance? Have you ever thought about it? Maybe NOW is the time to weigh all your options.