Wondering who needs life insurance the most? Essentially there are five primary types of people who absolutely do.
First, lets consider what life insurances offers. At the core of each and every solid family financial plan is life insurance.
That’s because life insurance (and other appropriate forms of insurance) serves as a “fail-safe” that provides the funding needed to carry out a financial plan in the event of an unexpected death. Without this fundamental pillar of protection, any financial plan is at best a “cross your fingers and hope” wishlist. Simply put, life insurance is like an American Express card — you should never leave home without it.
Who needs life insurance the most? Here are 5 primary types of people
Individuals with financial dependents
The first category that absolutely needs life insurance are those with dependents of any kind. This includes married couples where one spouse is the breadwinner, a single parent or guardian of any kind. Another typical but less known candidate is the homemaker, as their untimely death can create unforeseen costs for childcare. Other candidates can be married or single family members who support elderly relatives, or even anyone who consistently supports charitable causes or organizations.
Individuals with joint financial obligations
Joint debts entered into by spouses are a prime example here. If you and your partner own a home together, get life insurance — it will cover your housing costs in the event of your partner’s untimely death. Individuals in this category can also include unmarried couples who jointly into leases, car financing arrangements, and even mortgages on a home or income-generating rental property. This same type of arrangement can also exist between a parent and a child, siblings, or close friends. You should also get life insurance if you’ve cosigned for some other types of debt, like a student loan or consumer credit debt, to protect your cosigner from having to foot the whole bill.
Individuals who have financial plans for the benefit of others
This is where the concept of life insurance being utilized to “complete the plan” comes into play. For example, when parents discuss college planning for their children they should discuss (amongst other things) the types of schools that the family is considering, the funds available for college saving, the investment vehicles available to execute the strategy (i.e. 529 plans, after-tax investments, etc.), and the timeline for investment. A financial planner can help evaluate scenarios to determine the efficacy of one strategy versus another and suggest an appropriate course of action.
Individuals who have an adverse genetic predisposition
Not mentioned often, but if illnesses such as certain cancers or medical conditions (hypertension, high cholesterol, or diabetes) are raised, life insurance can be used not only to address need, but also for the purposes of securing the client’s “insurability,” or ability to get and keep affordable insurance while they are healthy or haven’t manifested any potential symptoms that may be indicative of such illnesses or conditions being inherited. An individual with such a predisposition needs life insurance.
Individuals who have an inherently risky occupation
It should seem obvious, but it is way too often that we find servicemen like firefighters, corrections officers, and emergency responders are actually sorely underinsured. They perform extremely dangerous jobs where the prospect of not coming home at the end of a shift is very real. Having adequate coverage brings more peace of mind to not only the policyholder as he or she walks out the door in the morning, but to their families as well. (Source: BusinessInsider.com)