School for Fools – InsuranceNewsNet

Life insurance is very important, but it’s not for everyone. Singles without children often don’t need them, for example, but sometimes they do.

Many see life insurance as a lottery ticket, which will bring a big premium to our loved ones when we die. A better way to look at it is to protect an income stream.

Think about the income you earn. Does anyone trust it? For married people, there is a good chance that their spouses, and perhaps their children, will be worse off financially if they die and their sources of income come to an end. These people would be well served by life insurance.

Singles shouldn’t assume that they don’t need life insurance because very often someone is still dependent on their sources of income. For example, maybe you are helping your parents financially or your nieces and nephews. Or maybe you’re paying off a private student loan (or other loans) and someone, like a parent, co-signed that debt; if so, they will be forced to pay if you die.

If you’ve bought a house with someone, like a sibling, and both of you are making mortgage payments, life insurance can ensure your roommate doesn’t end up with unaffordable payments. .

If you’re a business owner, this can help keep the business afloat until the necessary decisions and plans are made (and your business lenders might demand it).

Finally, a modest life insurance policy can fund all end-of-life projects, such as funerals and burials.

There are two main types of life insurance: whole and term. Whole life insurance is part insurance and part investment, but you can usually invest better outside of your insurance policy. Term insurance tends to be a better choice, covering you for a specified period. For example, you could buy a 20 year policy that will last until your children are grown up.

Life insurance is no fun to think about, but a lot of people need it. ??

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