Almost everyone agrees that life insurance is a must for anyone with a young family. Leaving something behind is the only right thing to do when dependent children are involved. But what about single people, or childless couples? What benefits does life insurance provide for them?
A life insurance policy is an important component of risk management and financial planning in many different situations. It is important to evaluate the pros and cons carefully before making a decision about any type of insurance, and life insurance is no exception. Even with no children to consider, and even with no partner to consider, purchasing life insurance can be a very responsible decision.
The main purpose of life insurance is to replace the income of a person who has passed away. Without it, families could face serious repercussions following the passing of a parent. Losing an income increases the risk of a family losing a home, using up savings, and struggling to get by in the long run. A life insurance policy is normally the best protection for a family in the event of the death of a loved one.
There are two main types of this insurance. First, there is term life insurance. This type of insurance pays only if the death occurs during the term of the policy. Terms generally range from one to thirty years. Based on initial premium outlay, less expensive life insurance policies are generally term insurance.
With a level term life insurance policy, the monetary amount of the death benefit remains the same for the duration of the term. Almost all term policies are of this type. However, there is also decreasing term insurance. With this type of policy, the death benefit decreases over the term of the policy, usually annually.
The other most common option of life insurance is whole life, or permanent, insurance. A permanent life policy can be a great investment. This type of policy pays whenever the insured dies, even if that person has lived to an extremely old age. Additionally, this type of insurance can be a good way to save in the long term.
Because whole life insurance is designed to last until the insured is elderly, premiums are more expensive while the policyholder is still young. By frontloading the cost in this way, premiums stay affordable for elderly individuals on fixed incomes. In most cases, the early overpayment of premiums eventually become available to the purchaser in the form of cash value within the policy should he or she decide not to continue with the policy.
Because of this feature, the insured can often borrow against the accumulated cash value of his or her whole life policy. By contrast, term life insurance normally has no cash value. The only benefit of term life is the death benefit which will expire if the insured survives to the end of the policy term selected.
Who Needs This Insurance?
There are situations in which childless people, and even single people, benefit from owning a life insurance policy. Traditional whole, or permanent life insurance policies are a sound savings vehicle. A young, single person may be interested in a policy for this reason.
Dependents are another consideration. Even a childless person can have dependents who rely on his or her earning capacity. An example of this would be a spouse, an aging parent, or a disabled sibling. Providing for such a dependent is certainly the prudent thing to do.
Even in a situation with no dependents, a life policy can be important. The costs of a funeral can be very high. A cheap life insurance policy could be important to the parents of a young person who died suddenly, because it would cover the cost of a burial or cremation. This can keep bereaved parents from being burdened with unnecessary debt.
As a debt ridden society, most people find themselves owing money for various types of loans. Life insurance can also be a means to pay off this debt at the time of death
Finally, sometimes a policy is worth purchasing just for the endorsements, or riders, that become available upon purchase. Riders can be added that will provide for other risks, in addition to death.
Long-term care and disability coverage are the most common examples of this. Young people often have a better chance of surviving an accident, but the effects can still be devastating. Providing for the unexpected is always a responsible choice.
Choosing A Policy
Before choosing a policy, it is important to see several life insurance quotes. Read the policies carefully, and ask plenty of questions. This insurance needs to provide for your loved ones during a difficult time.
If you live in Oregon or Washington state, we can help with your life insurance needs. At Fox Insurance Agency, we are an independent agency. This means that we can provide life insurance quotes from several different nationally known providers.
Because of this, it is easier for you to find just the right policy to meet your needs. We are based in Beaverton, OR, but serve all of Oregon and Washington . Contact us today.
The information in this article was obtained from various sources. and is not all inclusive regarding the subject matter. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.