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6 Signs It’s Time For You to Get Life Insurance

As an adult, you might have a lot of financial responsibilities, such as paying off a mortgage, student loan, paying off credit card debts, or funding a retirement account. So, the last thing you want to do is to fund a life insurance policy.

But what kind of financial state would you leave your family in if you die tomorrow?

While you may not want to think about it, death and taxes are two things that are certain life. “We’re all going to die,” said estate planning attorney Liza Hanks. “Being realistic about it, being thoughtful about it is a really caring thing to do for the people you leave behind.”

So if you want to secure your family’s financial situation when you and your paycheck are no longer around, it might be time to think of getting a life insurance policy.

A life insurance, in general term, is a lump sum of money the insurance company gives your beneficiary when you die. A life insurance policy can provide financial protection for your family. It can help pay your funeral costs, mortgages, your children’s education, or other expenses.

Use this life insurance calculator to see how much life insurance you need.

6 Signs You Absolutely Need Life Insurance:

Although it is a long term strategy to have life insurance, not everyone needs one. After all, life insurance can be expensive to fund. But if you have minor children and have people who depend on your paycheck, you definitely need life insurance. If you’re lucky enough to be working for the federal employment, then you’re in good hands. In fact, one of the benefits of working for the federal government is the ability to participate in the Federal Employees Group Life Insurance. If you’re not, keep reading:

1. You are the breadwinner in your household.

If you are the breadwinner in your family, then you absolutely need a life insurance policy to replace your paycheck when you are gone. With a life insurance benefit, your family will be able to cover living expenses that your paycheck would have covered.

2. You want to pay your own funeral.

The average funeral costs between around $7,000 to $9,000. That’s a lot of money to put on your family’s shoulders after you pass away. So to help your family cover the cost of funeral, plan ahead and get a life insurance policy.

As Annamaria Vitelli, managing director at PNC Asset Management Group said, “life insurance can help protect your family and keep them financially secure when you’re not there to take care of them.” “In addition to supporting your family, life insurance proceeds can help provide immediate cash at death and take care of some or all of a decedent’s debts, funeral expenses and income or estate taxes.”

Click here to apply for life insurance with Ladder.

3. You’re a homeowner with a mortgage.

Mortgage payments are perhaps your biggest monthly expenses. If your paycheck covers the entire monthly payment or even a portion of it, you still need a life insurance so that your family won’t have to struggle to find extra money or leave their home when you die.

4. You are a divorced parent and paying child support.

If you’re a divorced parent and you’re now paying child support, then you need a life insurance so your child can still get money you would have otherwise paid in child support. The life insurance payout would provide help with everyday expenses such as food, clothing, education for your children.

5. You’re a stay at home parent.

If you’re a stay at home parent to look after the children and run the household while your partner goes to work, you too need a life insurance, because once you’re no longer around all of the work you used to do around the house will need to be done by someone else. A life insurance payout can help to pay for things such as childcare, a nanny, etc.

6. You and your spouse have small or no assets.

You may need life insurance if you and your spouse have zero or very little asset or passive income streams to independently care for yourselves in the event that one of you dies.

For example, let’s say you’re a lawyer or a doctor earning a high income, say $200,000 a year. But you have no passive income streams or assets, but only depend on your paycheck to support your family. If you die, the paycheck stops coming. Your family may face financial burden without your paycheck.

Now, let’s say you own a hotel or an apartment building and collecting rent monthly, money will still come in even if you are gone. The lawyer/doctor actively trades their time for a paycheck, while the business owner earns his or her income passively.

So, if you’re actively trade your time for a paycheck with no other assets, you should definitely carry life insurance.

The bottom line…

Although not everyone needs a life insurance policy, if your loved ones count on you to take care of them financially if something happens to you, you are definitely someone who needs to carry one. But how much life insurance do you need? Use this free Life Insurance Calculator to find out.

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Speak with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you reach your saving goals Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

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