The costs that surround a death can be staggering. It is not unusual for funeral and burial costs alone to soar over $10,000. In fact, it is quickly becoming the norm. Combine this cost with the loss of income, medical bills, or other bills surrounding a death, and a surviving family’s finances can quickly spiral out of control. Now, the surviving family members are not only burdened with grief, they are also saddled with worry and stress over how they are going to survive. The fact is that much of this added grief is unnecessary and can be prevented with the simple act of purchasing life insurance.
Why Should I Worry About Buying Life Insurance?
Life insurance is something that working age adults, particularly those with families, should not be going without. This is especially true because it is relatively cheap to buy. While there can be an argument made for both term and whole life, the important thing is that you need to have something.
Not only can life insurance pay for your final expenses, but it can help to replace your income as well. Furthermore, it helps to provide your family with a financial cushion, just incase they feel unable to return to work immediately. It is cheap, provides protection for your family, and will help to secure their financial well-being should you pass away. It seems like a no-brainer, doesn’t it?
Do Young Adults Really Need Life Insurance?
Many younger adults wonder if they really need to purchase life insurance. Since they don’t have a family, is insuring their life really necessary? Besides, they are young. They are immortal. They are never going to need life insurance anyway, right? Unfortunately, I’ve learned from both personal and professional experience that young people die a lot more often than anybody would like to think.
For some young adults, it may in fact be true that life insurance is unnecessary. If you have enough money saved so that your burial expenses are paid for, you may not need to carry it. However, for the majority of younger adults, life insurance is a necessary protection for their family (parents, grandparents, etc.) as well. Why?
Let’s assume that the unthinkable has happened, and you – a 24-year old recent college grad – died in a car accident. You financed the new car you bought shortly after your college graduation – an education that you also financed using student loans. Since you likely have a limited credit history, chances are that somebody in your family had to cosign those loans for you. Unfortunately, those loans don’t just go away and the responsibility of paying for them will fall to your cosigner. So now, your family is not only burdened with the grief of your death, but they are also saddled with the pain of your debts as well. If you are responsible enough to be living on your own, you should also be responsible enough to protect your family and carry some life insurance to cover your debts.
How Much Life Insurance Coverage Do I Need?
While financial luminaries like Dave Ramsey recommend that you should have coverage equal to 10 years worth of salary, we have decided to go with a little bit less than that amount. At the time that we purchased our life insurance policies, our death benefit covered all of our assets and more. Now that we have children and a bit more net worth, we have considered increasing our coverage amount. However, since we will be debt free in less than 3 years, we’ve decided against it. The house will be paid for, and my family could comfortably live off of my wife’s salary. So, while 10 years salary may be a good rule of thumb, you need to decide on the amount of coverage that is right for you based on your specific needs and goals for your coverage. The good news is that if you are in good health term life insurance is SUPER cheap. I qualified for a $500,000 policy from one of the top rated life insurance companies for less than $50 a month. That makes the decision much easier to go with a larger death benefit if you need it.
Unfortunately, death will come for all of us. Often times, it comes when it is least expected. Purchasing life insurance is the best way to make sure that your family’s financial well-being is protected. Really, it is so cheap that there is no good reason not to have it. So, if you aren’t protected, make sure to go out and find some term insurance today. Trust me, your family will thank you for it.