Much like filing taxes or renewing your vehicle registration, life insurance can be one of those “adulting” things you might tend to put off. But if you have loved ones who depend on your income, you owe it to yourself—or more accurately, to them—to learn about your options to avoid a potentially disastrous financial situation.
Let’s start with the basics.
What is life insurance?
A life insurance policy is a contract between an insurance company and an individual. In exchange for regular payments, the insurance company agrees to pay a lump sum of money to a designated beneficiary if the insured person dies within the terms of the contract.
There are a million different life insurance policies, but they all boil down to two main categories—termor permanent. We’ll cover these in more detail in a later newsletter, but for now, here are the main differences:
- Term life insurance provides coverage for only a predefined term (like 10, 15, or 20 years). It’s usually far cheaper than permanent life insurance.
- Permanent life insuranceprovides coverage for a person’s lifetime and usually includes a savings component. It’s significantly more expensive (and often more complicated) than term life insurance.
Insuring your life may sound a little morbid, but it’s a valuable component of a smart financial plan. Here’s why:
- It helps family members get by financially if the breadwinner passes away.
- For dual-income households, life insurance could ensure the surviving member keeps the house they might not otherwise afford.
- It could pay off debts that get transferred to co-applicants and joint card holders.
- It could pay for the kids’ college.
- It could finance the funeral.
…And the list goes on. In general, life insurance isn’t really about the person who pays for the policy. It’s about protecting loved ones if the worst were to happen.
Do I need life insurance?
The best way to know if you need life insurance is to look at the people around you. Do you have loved ones who rely on your income—people who would suffer financially if you passed away? If so, then you should consider getting life insurance.
Surprisingly, that question doesn’t just apply to income-earners—consider the amount of money it would take to hire out the duties of a stay-at-home parent who unexpectedly passes away. That’s a disastrous situation no matter what, but your family could at least lessen the financial impact with life insurance.
And in some situations, single people might need life insurancetoo—specifically those with debt.
Okay but… how much does it actually cost? We’ll discuss that topic in next month’s newsletter, so don’t miss it! (Spoiler: it could be cheaper than you think.)
You aren’t replaceable, but your earnings could be. Explore Haven Life’s term life insurance options for covering your bases in a worst-case scenario. Get a Free Quote ›As part of our affiliate partnership with Haven Life, we may receive compensation if you visit their site.
Haven Term is a Term Life Insurance Policy (ICC21 Haven Term in certain states, including NC) issued by C.M. Life Insurance Company (C.M. Life), Enfield, CT 06082. In New York (DTC-NY), California (DTC-CA), and other states it is issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.
Haven Simple is a Simplified Issue Term Life Insurance Policy (ICC20 HAVEN SIMPLE in certain states, including NC) issued by C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527. Privacy Policy| Unsubscribe
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