When is life insurance worth it?
Life insurance can be beneficial for millions of adults. In return for a minimal fee to a provider each month, policyholders can secure coverage for hundreds of thousands of dollars (and potentially $1 million or more). There are two primary types that most people utilize. Term life insurance comes with lower premiums but the insured is only protected for a specific time frame. Whole life insurance has higher premiums but it will cover the insured for their entire life (hence the name).
While many financial advisers would recommend at least a baseline of coverage, there are some times when life insurance is more important to have than others. This leads to the question of when life insurance is really worth having. While the benefits of this type of insurance are specific to the individual, there are some reliable ways to know when it's worth securing coverage. We will explore three of these below.
If you're in the market for life insurance then start by getting a free price estimate to learn more.
When is life insurance worth it?
Life insurance is especially worth securing in these three scenarios.
When you have financial dependents
If you have children or a spouse that depends on you financially then you'll want a policy to fill the financial gap your absence could leave. The ages of your children and your career status will determine how much you need. For example, if you have young children and years (if not decades) of earning potential ahead of you then you'll want a policy that can cover all of that lost income. If your children are older and their tuition costs are close to being paid off then you'll need less. Similarly, if you're close to retirement (and can afford to do so) you can probably get away with less coverage. No matter where you stand, however, if you have people relying on you financially then life insurance is worth it.
Get a free price quote here now to see how much it would cost.
When you have a mortgage
If you still have a long way to go to pay off your mortgage then life insurance is worth it. A robust life insurance policy in the amount you owe to the bank can ensure that your loved ones can remain in the same house. Without a life insurance policy in that amount, you could jeopardize your family's ability to pay it off. For some people, that may not be a factor because they're OK with selling the home after the mortgage holder has passed. They could also be financially comfortable enough to continue to make the payments even after the initial borrower has died. If you're not in either of those categories then life insurance is worth it for you.
When you want to leave an inheritance
Life insurance is often not thought to be worth it for seniors and older adults due to the higher costs and lower coverage amounts but that's a misconception. It can still be valuable to have (even for seniors) if only to serve as an inheritance for loved ones after the policyholder has died. If you want to leave your family a substantial sum of money - and don't have any significant savings or home equity that can help meet that goal - then life insurance is worth it. Life insurance in a six-figure amount can be potentially secured for less than $100 a month, making it a worthwhile investment considering the final payoff to beneficiaries.
The bottom line
There are many times that life insurance is worth it. If you have financial dependents, a mortgage or want to leave an inheritance to loved ones, some would say life insurance is mandatory. Either way, it doesn't hurt to start shopping around to compare rates and providers. Get a free price estimate online now or use the table below to start comparing life insurance companies.
