Have you seen
commercials for life insurance before? Maybe they run in the middle of the day
during your favorite game show, and usually feature happy older adults who want
to cover their final expenses? Commercials like these probably have led you to
believe that life insurance is meant for older people, or that the main purpose
of it is to cover funeral costs. However, this is not the case. While these
advertisements target retirees and grandparents, young parents are actually in
the greatest need of life insurance.
Why is this so?
Well, life insurance is not meant to cover just the cost of a funeral or a few
unsettled debts. Life insurance is meant to provide financial support to a
person’s dependents should he or she pass away. Older, retired adults usually
have assets from years of working and mortgage paid off if they owned one as
well as dependents have grown up and therefore usually do not need a lot of
insurance coverage. On the other hand, young and middle-aged adults often work
to support a family, and life insurance plans are more helpful in unlucky
circumstances.
A dependent
is anyone who relies on another’s income in order to survive, and they are the
real reason most people need life insurance. Small children, for example,
cannot get a job to support themselves if something unfortunate were to happen
to their parents, much less pay off any debts that were left behind. If
widowed, unemployed spouses may face difficulties paying for the expenses that
pile up. Employed spouses may fair better without an insurance pay out, so long
as the lost income was not needed to care for children or pay off debts. After
children grow up or a spouse becomes employed, people can often save money and
cut their insurance coverage because fewer people are relying on their income.
The amount of
insurance coverage a person needs can usually be determined by the number of
dependents and the amount of debt that he or she has. There are also many
different types of life insurance plans, and we will discuss a few in a later
post. Life insurance is a personal decision, but keep in mind the real reason
why insurance is important so you can make the right choices in the future.
READERS,
what do you think?
Why do you
think some people with dependents do not have life insurance policies?
Do you think
some people have more life insurance coverage than they need? How so?
