When Do I Need to Buy Life Insurance?
As you get older, you start taking on more responsibilities: new career, family, all that fun stuff. You might be asking yourself, when do I need to buy life insurance? When is the right time?
Hey, this is Jeff Rose from Wise Bread. We're going to answer the question of when you need to buy life insurance.
To me, answering the question of when you should buy life insurance is really easy. Just ask yourself this. Is there anyone you love and care about who would be in financial bind if something happened to you? When I think of this, I think of my wife. I think of my three kids. If you're not married and if you don't have kids yet, it could be parents that have loaned you a lot of money to get through college and to get your life started. So if they could be in a financial bind if something happens to you because you owe them money, or they've given you a lot of money, or they're dependent on your income — that's when you need to buy life insurance.
Another common question I get, especially with parents, is should you buy life insurance on your children? And I'll be first to tell you that I'm not a big fan of buying life insurance on your children. I think that you can invest the difference and you'll have a lot more money for them later on. With that said, if you buy a life insurance policy for your children it's not really that expensive. I've seen policies be anywhere from $5 to $25 a month. But don't invest a lot of money to life insurance when you're putting in $50 to $100 a month for a life insurance policy. I've seen a lot of parents become insurance poor because they're spending too much on life insurance for their kids and not saving enough for their own retirement.
Another thing that parents might not realize is that, with a traditional term policy, you can actually get a child rider on that policy. For example, I can buy a million dollar term policy and then add a child rider. A rider basically is an added feature that you're going to pay a little bit more for. Think of it like buying a new car and how you can have a sunroof or leather seats that costs extra. That's kind of what a rider is.
When you buy this rider, if something happens to one of my kids, then I would get a sum to help pay for that funeral. It varies with each life insurance company, but that sum could be anywhere from $10,000 to $25,000. The cost for a rider really isn't that much, and the cool thing about that rider is that it covers any kid. So you can buy one rider for your policy and if you have five kids, and something happens to one of those five, you'll be covered.
If you're single, completely independent, you don't anyone any money, if you self-funded your way through college, then buying life insurance is really not important right now. But when you start a family, when you have a husband or wife and you have children, that's when buying life insurance becomes important.
And let me just throw this in real quick.
Buying life insurance is cheap. Don't think that it's expensive. It's amazing how people think that life insurance is too much. Use the free quote on our site just to see how cheap life insurance really is.
If you have any more questions about buying life insurance this is Jeff Rose, your resident life insurance expert here at Wise Bread. I'll be glad to answer any questions you have. Until next time, take care.