Life Insurance Policy: Save and Secure Your Family’s Future

If you’re reading this blog, congratulations! That means you’re on the right track to take care of your loved ones in the long term. In this blog, we explain that your circumstances are just as important as your age when it comes to buying a life insurance policy.

When Do You Need a Life Insurance Policy?

When you purchase life insurance, you agree to pay a life insurance company a certain premium per year in exchange for a lump sum death benefit—or cash payout—when you pass away.  The purpose of this death benefit is to provide financial support for your dependents and/or whomever will inherit your debt.

Of course, it’s also possible to buy a policy if you don’t have any dependents or debt and then leave the death benefit to a beneficiary of your choice. However, for the purposes of this blog, we’re only going to consider cases in which you actually need a life insurance policy.

So what types of situations are these?

  • If you have debt that your parents have co-signed, such as a student loan or a car loan.
  • If you have debt that your significant other has co-signed or would inherit upon your death, such as a mortgage, car loan, or personal loan.
  • If you have credit card debt.
  • If you have dependents who rely on your income, such as children, a non-working spouse, or an elderly or sick relative whom you support financially.

After you pass away, your death benefit will be the first line of defense for your dependents or heirs. Without it, heirs are liable for your debts after your assets have been liquidated, and dependents are stuck without an income.

For example, without life insurance, your parents who co-signed your car loan would have to simply pay off the balance themselves. Similarly, if you don’t have life insurance, there’s no death benefit for your spouse to pay off your credit card bills and mortgage. Or if you have children, your significant other would be entirely responsible for their health, wellbeing, and education.

The Best Age to Purchase Life Insurance

Clearly, there’s no pre-determined age at which you should buy a life insurance policy. Nonetheless, as a rule of thumb, if you’re going to buy one, the younger you are when you do so, the better. Life insurance becomes more expensive each year you grow older because there’s more risk of you developing health conditions and passing away. So if you buy a policy when you’re 25 and healthy, it will cost far less than when you’re 35 and have pre-diabetes.

Contact Us for More Information

If you’re interested in purchasing a life insurance policy, it’s best not to go it alone. Our team here at Liberty Financial Group can provide you with objective advice as to the best policy for your situation. Contact us for more information.

Sources

https://www.investopedia.com/articles/investing/072816/what-best-age-get-life-insurance.asp

https://www.experian.com/blogs/ask-experian/what-happens-to-credit-card-debt-when-you-die/