Not everyone needs life insurance. For example, you may not need life insurance if you’re single and financially independent. But a life insurance policy can give you peace of mind if you have small children, a spouse, or anyone else depending on your income.
In the event of your death, a life insurance policy would help cushion the loss of your income. It may also help cover your funeral and burial expenses.
Here’s what else you need to know.
Can you think of anyone who would fall into financial hardship if you were to die? If not, you probably don't need life insurance.
That being said, here are the groups of people who benefit most from purchasing a life insurance policy.
According to the Pew Research Center, 27% of single parents in the United States live in poverty. That’s more than 1 in 4 single parents. There are many economic factors driving this statistic, including the high cost of child care.
The Economic Policy Institute reports that the average cost of infant care in Michigan is $905 per month and $10,861 per year. That’s about 6.7% more than the average cost to rent in Michigan!
The average cost of child care for a four-year-old isn’t much more affordable at $741 per month and $8,890 per year.
The high cost of child care may explain why 23% of single parents live with one of their own parents.
These statistics aren’t meant to scare you. But we don’t want to sugarcoat the reality that single parents face every day to support their families. Life insurance can help protect your family financially in the event of your death.
If you’re worried about the cost of life insurance, a term policy will typically be less expensive.
If you’re a business owner, you’ve put a lot of time, effort and money into growing your company. But without life insurance, your heirs could be left with some serious business debts with no way to pay them off. As such, they may struggle to keep the company afloat or be forced to sell. A life insurance policy helps ensure that your legacy lives on after you pass away.
If you own the majority of your company’s shares, you may want a life insurance policy to fund a “buy/sell” agreement. This would help the surviving minority partner(s) buy your company shares if they could otherwise not afford to do so.
If you have key employees that are vital to the health of your business, you may want to consider insuring their lives. This type of policy is called key employee insurance. Under this type of policy, your company would buy the insurance and then list themselves as the beneficiary.
Are you getting close to retiring but haven’t fully funded your retirement plan? If so, you may want to consider buying a life insurance policy. Life insurance can help supplement your surviving spouse’s retirement if they were depending on your retirement contributions to live comfortably.
Related: Do My Medicare Benefits Cover My Spouse? →
If you have a large estate exceeding $11 million that can’t be easily liquidated, you may want to consider purchasing a life insurance policy. For example, sometimes the value of an estate is tied up in land or a business. Under these circumstances, your beneficiaries would need enough life insurance to cover the estate taxes.
Michigan Planners is a group insurance brokerage firm that’s proud to serve both individuals and business owners. To start shopping for life insurance, please call Michigan Planners at (800) 674-9235. You may also fill out our online contact form and someone from our team will reach out to you soon.