The straight-up answer to when you should buy life insurance is when there are people relying on your income. This is going to get a little dark, but if your death would affect someone’s finances, then you need to buy life insurance.
For example, if you have a spouse and two kids and you’re the breadwinner, you need to buy life insurance. Think about what would happen to your family’s finances if you passed. Would they be able to stay in your home or would they have to downgrade?
It’s a depressing thought to consider, but it’s also crucial for your family’s financial stability. If you pass away without life insurance, you could leave them grieving and stranded. How much of a policy you buy depends on your outstanding loans and how much you earn annually.
However, if you’re single and live alone with your cat (no shade!), then you probably don’t need to buy life insurance.
Because life insurance is designed for those who earn a living, it doesn’t make sense to buy a policy for someone who doesn’t work. Parents don’t need to buy policies for their kids because their children aren’t making any money.
What kind of life insurance should I buy?
There are two main kinds of life insurance: “whole” and “term.” Whole life insurance is designed to protect the individual for their entire life. Because it’s supposed to last so long, it’s also very pricey. Premiums often cost hundreds of dollars a month.
Most financial experts say whole life insurance is unnecessary. It’s super expensive and because you usually don’t need life insurance your whole life, you’re better off buying term.
Term life insurance only covers folks for a portion of their life, usually between 10 to 30 years. Because term life doesn’t last as long as whole life, it’s much more affordable. Most people can buy a policy between $20 to $50 a month, depending on their age, if they smoke and any other medical conditions they have.
Getting a term life insurance policy is relatively simple. You can find a policy directly through an insurance company, use an insurance broker or go through a third-party company like Policygenius.
You’ll fill out an application with basic information like your birthdate, height, weight, any health conditions, family medical history and more.
Most life insurance companies also require a basic medical exam. You’ll usually have to provide a urine sample and blood draw (not fun, but necessary). Sometimes they’ll pull medical records from your doctors, so don’t lie on your exam (you can’t Catfish an insurance company).
If 2020 has taught us anything, it’s that we can’t take life for granted, so if you have people in your life that are relying on you, it’s a wise move to make sure they’re taken care of no matter what.