Life insurance is one of many components of estate planning. Statistics from the insurance industry groups Life Happens and LIMRA indicate that 70 percent of Americans consider life insurance a necessity. However, 41 percent of respondents in 2017 did not have any life insurance.
Even though most people deem life insurance important, it is not necessary for everyone. These qualities often make life insurance a smart move.
You’re married or in a committed relationship
If you are married or in a relationship in which your partner depends on you financially — even if just partially — it is smart to have a life insurance policy. This way your significant other does not have to rely entirely on his or her income to pay off debts or maintain the quality of life you currently enjoy.
Many households cannot function without two incomes. Life insurance can ensure financial burdens do not rest entirely on the shoulders of surviving loved ones.
You have children
If you have children who depend on you, life insurance is a must-have. If your spouse and children could not continue their standard of living on one income, then life insurance can fill in the gap or pay for future plans, such as college educations.
Even if you are a stay-at-home parent, your contribution to the household still holds weight. Should you pass away, your spouse will have to pay for tasks that you would normally perform, such as child care, cleaning services, cooking, and transportation.
You’re a business owner
Entrepreneurs benefit from life insurance since it can help pay off business debts, advises the online financial resource Nerd Wallet. When business owners pass away, their heirs might be able to use life insurance payouts to pay off estate taxes or fund a buy-sell agreement.
You want to leave an inheritance
If you do not have a vast accumulation of assets, investing in permanent life insurance can provide a small sum of money to heirs upon your death.