Life insurance, like any insurance cover, is expensive. When times are tough and you’re deciding what’s a necessity and what’s a luxury, it’s only natural to question the necessity of a costly insurance policy that appears to do nothing for you while you’re around to use it. But before you drop your life insurance cover, which may be even more expensive to purchase again later, ask yourself these questions to determine whether life insurance is a luxury or a necessity for you and your family.
Are You a Single, or Do You Have Dependents?
One of the great advantages of being single is that the cost of living is much less, and that includes insurance cover. Singles with no dependents, no debt and no desire to leave a financial legacy to a loved one are lucky enough to count life insurance as a luxury. Those with dependents who will need financial support in the event of their death, however, may find that life insurance is a necessity (read on to find out).
Do You Have Accessible Savings (And Is It Enough)?
Those who do have dependents who rely on them for financial support are often urged to carry life insurance cover, and for good reason: dependents, especially young children or dependents with health or cognitive issues that make them unable to support themselves, cannot financially fend for themselves. However, if you have substantial savings, or have retired and have retirement income that will come to your dependents in the event of your death, then you may not need life insurance.
Are You the Sole or Major Means of Support For Your Dependents?
If you are the sole support for your dependents, or your income is the major means of their support, and you are nowhere near retiring, then life insurance may very well be a necessity, as, without it, your dependents are likely to be destitute in the event of your death.
The argument that a spouse or other guardian/caregiver can support your dependents after your death is a valid one, but disingenuous, because it assumes that the guardian/caregiver will be able to find a job and able to work. If your income is supporting most or all of the financial burden of caring for your dependents, and you have no other income to supplant it, life insurance is likely a necessity for you.
If you’ve asked yourself all these questions, and have determined that life insurance is indeed a necessity, don’t despair of not being able to pay for it just yet. It could be that you need to re-evaluate what you can afford when it comes to life insurance cover. Talk to an adviser about the different types of life insurance cover available, and about how to find a policy or policies that are affordable, while still offering a bit of a financial cushion for your dependents in the event of your death.
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