Topic 3: Who Needs Life Insurance? 10 Ways You Can Use Life Insurance

Here is a list of people who might need life insurance at different life stages, and why you would want to buy life insurance at these stages.

This list will help you consider various reasons to purchase life insurance and help you figure out if it is time for you to investigate buying life insurance or not.

A financial advisor or life insurance representative can also help you explore different life insurance options and should always be consulted for their professional opinions to help you make a choice.

1. Beginning Families
Life insurance should be purchased if you are considering starting a family. Your rates will be cheaper now than when you get older and your future children will be depending on your income.

2. Established Families
If you have a family that depends on you, you need life insurance. This does not include only the spouse or partner working outside the home. Life insurance also needs to be considered for the person working in the home. The costs of replacing someone to do domestic chores, home budgeting, and childcare can cause significant financial problems for the surviving family.

3. Young Single Adults
The reason a single adult would typically need life insurance would be to pay for their own funeral costs or if they help support an elderly parent or another person they may care for financially. You may also consider purchasing life insurance while you are young so that by the time you need it, you do not have to pay more due to your age. The older you get, the more expensive life insurance becomes and you risk being refused if there are problems with the life insurance medical exam.

4. Homeowners and People with Mortgages or Other Debts
If you plan on buying a home with a mortgage, you will be asked if you want to purchase mortgage insurance. Buying a life insurance policy that would cover your mortgage debt would protect the interest and avoid you having to buy extra mortgage insurance when you buy your first home.   Life insurance can be a way of securing that your debts are paid off if you die. If you die with debts and no way for your estate to pay them, your assets and everything you worked for may be lost and will not get passed on to someone you care about. Instead, your estate may be left with debt, which could be passed to your heirs.

5. Non-Child Working Couples
Both persons in this situation would need to decide if they would want life insurance. Maybe in some instances one working spouse contributes more to the income or would want to leave their significant other in a better financial position, then as long as purchasing a life insurance policy could be an option.

6. People Who Have Life Insurance Through Their Work
If you have life insurance through your work, you should still buy your own life insurance policy. The reason you should never only rely on life insurance at work is that you could lose your job or decide to change jobs and once you do that, you lose that life insurance policy. It is not strategically sound to leave your life insurance at the hands of an employer. The older you get the more expensive your life insurance becomes. You are better off buying a small backup policy to make sure that you always have some life insurance, even if you lose your job.

7. Business Partners and Business Owners
If you have a business partner or own a business and there are people relying on you, you can consider purchasing a separate life insurance policy for your business obligations. 

8. Buying Life Insurance on Your Parents 
Most people don't think of this as a strategy, buy it has been used and can be a smart thing to do. Life insurance on your parents secures a death benefit to you if you put yourself as the beneficiary of the policy you take out on them. If you are paying their premiums you will want to make sure you make yourself an irrevocable beneficiary to secure your investment. This way when your parents die, you secure the amount of the life insurance policy. If you do this while your parents are young enough, it may be a financially sound investment. You may also want to protect your own financial stability by looking at buying long-term care for them as well or suggesting they look into it. Often when parents fall ill as they get older the financial burden on their children is enormous. These two options may provide financial protection that you might not have otherwise thought of.

9. Life Insurance for Children
>> If you worry about your children eventually getting an illness. Some families have concerns about their children's long-term health due to hereditary risks. If parents fear that eventually, this may make them uninsurable later in life, then they could consider buying their children life insurance so they don't worry about failing medical exams later when they need life insurance for their own families.

>> Some people purchase life insurance for children as they reach early adulthood to help them get a head start on life. A permanent life insurance policy may be a way to build savings for them and give them an opportunity to have a life insurance policy that pays for itself by the time they have a family of their own, or if they want to use the cash portion to borrow against for a major purchase. Life insurance for children may be purchased as a gift to them

10. Elderly
One useful thing about life insurance if you are older, is the tax savings elements if you want to preserve the value of your estate. You should speak with an estate attorney or financial planner to understand if buying life insurance in your later years may provide tax benefits.

Source: thebalance.com
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