How does life insurance protect your family? To get the full picture, you need to be aware of what might happen if you or your spouse passed away unexpectedly.
Let's take a look at what happens, financially speaking, when you lose one of your family members. If that family member is also your head of household and breadwinner, the financial repercussions are especially severe. They may include things like:
- An unpaid mortgage
- Lack of funding for your child(ren)'s college education
- Outstanding car loans
- Credit card debt
- Financial support for your dependents
- Funeral expenses
- Estate administration costs
You can use life insurance to protect your family from the financial responsibilities that come along with a loved one's premature death. No matter your family situation, here's how life insurance can help:
If You're Single
If you're single with no dependents who rely on you for financial support, you might wonder why you need life insurance. First, think about whether you have any outstanding debts that your parents or other survivors might be obligated to pay. If you hope to have a family in the future, it's also a good idea to get covered before any health problems crop up that could increase the cost of your policy. If you do have dependents who rely on you for financial support, it's even more important to get insured. If you passed away suddenly, life insurance would provide your loved ones with the cash they need to continue paying rent, buying food and clothing, and handling other day-to-day living expenses.
If You're a Single Parent
Your premature death as a single parent can have a serious financial impact on your survivors. Life insurance is a cost-effective way to make sure that your children are protected financially should anything happen to you. As a single parent, it's especially important to name a guardian for your children, and to be sure your life insurance policy is set up in a way that allows the guardian to access that money on your child's behalf until they come of age.
If There Are Two Wage Earners in Your Home
In most homes with two wage earners, both of them depend on the other to make financial ends meet. It's relatively rare that one person's income pays all of the bills. Usually, both paychecks are needed to make ends meet, save for a rainy day, and take the occasional vacation. That means that if either person's income vanished, some of those financial goals would have to be revised or eliminated altogether. Life insurance provides replacement income for the surviving spouse, allowing your family to maintain its standard of living while still saving for retirement, college, and other long-term expenses.
If There's One Wage Earner in Your Home
If there's only one wage earner in your home, the premature death of that person would definitely cause hardship for the rest of the family. If your family needs your paycheck to put food on the table, life insurance isn't a luxury...it's a necessity. It's also important to think about the role of the stay-at-home parent. The services and care he or she provides every day can really add up, to the tune of more than $90,000 per year. If you had to hire help to handle cooking, cleaning, childcare, chauffeuring, laundry, and more, you'd approach a six-figure budget really fast. Insuring both spouses is something many families don't think about, but it's often necessary to keep the household running in the event of either parent's death.
If You're an Adult Child Who Supports Aging Parents
If you're an adult child who supports a family of your own along with aged parents, your premature death could cause great hardship to your survivors. Life insurance will help your spouse, who would now be responsible for aged parents and his or her dependents.