The right time for life insurance

Life insurance can be a tricky subject depending on what stage of life a person finds themselves in. Variables such as term limits, whole life policies, benefit amounts, and riders can all create a complicated mess capable of scaring someone away from getting coverage.

Because of this complexity and cost, U.S. News reports that about 30 percent of American households have no life insurance coverage at all. Even more worrisome is the fact that there are 11 million households without coverage that include children under the age of 18.

The purpose of life insurance
In simplest terms, life insurance provides a financial benefit at the time of death. A family’s breadwinner might want to provide for the family. A spouse might want to be sure the mortgage is paid off if he or she dies. Parents might want to be sure kids could go to college if one of the parents dies.

Life’s different stages can determine need
Kiplinger.com suggests that people look at life insurance through the perspective of what their current and future needs are and allow those circumstances to govern when and how much life insurance is required.

Single people without children
In this stage, of life single people are usually better off investing their money rather than buying life insurance. But some life insurance is probably necessary. For example, everyone will need burial expenses at the end of life and leaving that burden to family is irresponsible.

Of course, single people with children should carry enough life insurance to provide for their children and/or pay off the house.

Married couples without children
At this stage of life, people must have life insurance to pay off a mortgage or debts that could burden the surviving partner.

Families
Families with one income and young children are the classic high-need situation for life insurance. In this case, the financial payout would be vital for covering lost income if the breadwinner died prematurely. Special considerations should be paid to how much income would be necessary to cover the family for many years as well as expenses such as college tuition down the road.

Retirement
Once the kids are grown up, the mortgage is paid off, and the breadwinner is in the twilight of his/her career, life insurance could become less important. In this case, the financial benefit could be used to cover estate taxes to protect heirs.