Is Life Insurance Worth Getting?

Life insurance is worth getting if you have a family to protect or if you have some financial obligation you need to cover if you die.  For a large number of people, protecting family members from financial hardship is easily done with term life insurance.  Term policies are the cheapest type of life insurance available and most people will find a policy that fits their budget.  It's important to understand that term life insurance is temporary, so you'll need a backup plan for when your term expires.

Some people plan to save money in addition to buying term life insurance with the hope that savings will be sufficient to cover the needs of loved ones should death occur after a term life policy expires.  Those who are less confident in having the savings to do this opt for either whole life or universal life insurance because these types of life insurance can last for your entire life.

Should I get Term Life Insurance if I'm Single?

If you are single, life insurance is generally not worth getting.  However, if you have financial obligations that will fall onto someone else if you die, owning a term life policy is a smart way to avoid burdening other people.

One of the best examples of someone who might want to seriously consider buying some term life insurance while single is anyone who has student loans with a co-signer.  Some private student loans may obligate the co-signing parent (or whomever) to repay the loan if the borrower dies.  This could cause extreme hardship on the behalf of a well-intentioned parent.

Some single people buy cash value types of life insurance in order to build cash over a longer period of time.  These people eventually plan to get married and have a family, so buying one of these types of life insurance puts them in a position to spend less money on life insurance later in life.

Is Whole Life Insurance Worth it?

Whole life insurance is a very complex subject when it comes to insurance planning.  There are many reasons why someone might want to buy whole life insurance.  There are three primary reasons why someone might consider buying whole life insurance:

  1. Permanent death benefit
  2. Lower cost of life insurance long term
  3. Cash value accumulation

The permanent death benefit provided by whole life insurance is something you cannot outlive.  So long as the policy owner pays the premiums due on the policy, he/she cannot lose his/her coverage.  Some people will always have a need for a death benefit.  Examples include: people who have children with special needs, married people with pension benefits who opted for a single life payout, married couples who rely heavily on social security income, and people who continue to have financial obligations that outpace the accumulation of their assets.

Buying whole life insurance could result in a lower overall cost of life insurance.  Many whole life policies pay dividends and a whole life policy owner can use these dividends to reduce his/her premium costs.  This may end up providing death benefit at a lower net cost versus term insurance over one's lifetime.

Whole life policies accumulate cash value.  The policy owner is free to do whatever he/she wishes with this cash value.  This includes things like: take loans for major purchases, use the cash value to create retirement income, and/or surrender the policy for its cash value at some later date.

For some people, whole life insurance plays an invaluable role in their financial plan.  For others, they prefer alternative savings and investment options.  There is no one right answer, but there are many things to consider when deciding if whole life insurance is for you.

Is Life Insurance Worth Having after Retirement?

After retirement, the hope is that you will have minimal financial obligations.  But sometimes that hope is not reality.  There are many people who carry financial obligations into retirement much to the chagrin of financial advisors.  For these people, having life insurance in retirement probably makes sense.

For those lucky enough to have eliminated most if not all financial obligations–or those who have sufficient assets to cover such obligations–life insurance in retirement is no necessary.

Some people may chose to continue to owner whole life or universal life insurance in retirement.  They may decide that keeping the death benefit around helps them sleep at night or they wish to leave something behind to their kids or grandkids.  In addition, some people choose to make charitable plans with a whole life or universal life insurance policy they purchased.  What once served as a way to protect the family can now change as a way to leave a legacy in the form of a donation to an alma mater or favored charity.

Very few people who achieve financial independence and retire opt to continue term life insurance policies.  The odds of dying with the policy in force or low and while the cost of the policy may be small, it's an unnecessary cost if there is no financial hardship for a loved one upon your passing.

Bottom Line

For a large number of people life insurance is definitely worth it.  It protects loved ones from financial harship when an untimely death occurs.  It can also protect loved ones from financial hardship even if the death is more timely.  But not everyone necessarily needs to buy life insurance.  Those with few obigations or no immediate family members who face the burden of those financial obligations have little to no need for life insurance.

It's likely that your specific need for life insurance will change serveral times throughout your life.  You'll need to assess these needs as they develop and determine the correct type and amount of life insurance for you when that time comes.  This is often done best with the assistance of a trained life insurance professional who can help guide you on your choices as well as offer insights from his/her experience working with people everyday who have varying life insurance needs.

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