Life insurance in all of its forms can be a befuddling investment to even the most financially savvy of investors. Consumers who are interested in finding out more about life insurance products need to first consider the reason why they are interested. Different people have different reasons for wanting to be insured, and the specific reason or the particular coverage goal you have in mind will inform your choice on whether or not your ultimately decide to purchase a policy.
At its most essential level, life insurance is basically income protection, somewhat like annuities. We buy policies on the breadwinner in the family to protect the stay at home spouse and the rest of the family from losing the home in the event of death. These are typically the sorts of logical reason given for people to choose to get insurance of this variety. Some two income families have policies on both the husband and wife because neither of the two could afford to maintain their current lifestyle without the other's income.
There are life insurance policies available for children, often to take care of funeral expenses and those sorts of costs, and many parents and grandparents do choose to buy these plans. But as children do not typically have an income, purchasing a life insurance policy on a child in the strictest sense is a bad investment. Term life insurance policies on kids that allow the grown child to collect the policy payment at the end of the term don't prove to be worth much when adjusted for inflation through the intervening years. As a general rule, life insurance for kids does not make financial sense when you think of a policy as income protection.
Single individuals who do not have any children do not purchase life insurance as often as married people and parents of minors, but there are policies available for singles. Some opt for policies that will help pay off their homes if they die. Others go for plans to simply pay for their burial so their families are spared this expense. But in general, as an income replacement mechanism, a large value policy does not make a lot of sense for a single adult with no dependents.
In cases where both partners work in a household, it is usually advisable that each working spouse is insured unless either partner could maintain the current way of living financially on just their single income. In most cases in today's America, this is far from the case. Two income families are more common than ever, and most of them appear to need every last penny from both working parents just to make ends meet each month and maybe put a little away for the kids' college education.
Every family situation is different. It is easy enough to generalize about who needs it and who does not, but many different factors can come into play affecting a family's financial need one way or the other. For example, there may be a medical situation that creates large expenses every month and eats up all of one spouse's income. If the other spouse passed, there would be a whole lot of financial trouble without a solid life insurance plan.
A financial advisor does not offer generic advice on life insurance. A good advisor will take a close look at the family's current financial makeup and determine exactly where each partner's money is going (if both spouses work). Talk to a financial advisor about your life insurance needs.
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