Why Life Insurance is so Important

admin | June 23, 2014

Life insurance is one of the added expenses that many people like to avoid, and unfortunately they often have little to no insurance. It’s a shame that so many people are inadequately insured because you don’t realize how important it is until you actually need it, and that is worst possible time to have financial worries. There are several important factors to consider when purchasing life insurance, and each one needs to be carefully addressed.

First and foremost, at the very least you need to make sure you carry some form of insurance. There are many companies out there that provide several types of offerings, like life insurance from Suncorp, so doing some online research is highly recommended. With all the back and forth advice I hear regarding term versus whole life insurance it seems that each family needs to do the research on what works best for them. For myself I prefer term life insurance, I am young and relatively healthy, and it just makes more sense from a financial standpoint.

Next on the list is to make sure the insurance adequately meets the needs of your family, both now and later in life. The mistake most people make is that they only consider their current lifestyle situation. For example, a family that consists of two parents and two children may only think about the needs of their children today. However, as the children get older they may participate in sports, and eventually go off to a fairly expensive college, and the loss of income could prevent those things from happening. Consider the growing needs of your family, and how the loss of one spouse’s income could slow savings and future earnings. Even a family without children needs to think of the impact of losing out on years of additional retirement savings. Perhaps the spouse that passed away is the one who works for the company with a generous retirement contribution, and losing out on those contributions coupled with the long term gains could be detrimental to the surviving spouse’s retirement.

I have heard a common mistake that couples make when choosing coverage is that they only take out enough protection for the top wage earner. You need to realize that even the spouse who makes less money can still have a major impact on the financial stability of the family. Also, even a non-working spouse can affect the family finances. Perhaps the non-working spouse is a stay-at-home mother caring for multiple children. If that mother should pass then other expenses like daycare may be necessary, and quite expensive as well.

As you can see there may be more to life insurance than you initially expected. If you aren’t currently covered then you need to make sure you obtain coverage, that it adequately meets the needs of your family, and that you have considered all your options. Like I said before, most people don’t realize the importance of life insurance until it’s too late, don’t let that happen to you.