Why Young Families Need More Life Insurance
Life insurance is normally a subject's downer, so here I will try to prevent this. Today the Life Insurance Movement kicks off with the aim of giving this financial problem more recognition, which should not be neglected by people. Moreover, life insurance is so hard to buy, since it is mostly sold by salespeople who make big commissions by putting you into things you do not need.
But young families, as the title suggests, need more life insurance than anybody else and why do they have to remember those stuff!
Young Family Life Insurance
Perhaps the most important financial product a young family might purchase is life insurance. Why does that happen? Since life insurance is meant to provide you or your partner financially.
For instance, if the wife works and raises $75,000 annually and the wife is at home, what if the husband dies unforeseen? Who'll pay the bills? And time to complain? All this has to be prepared, and life insurance is probably a safe idea, unless you have an enormous emergency fund.
And when you're young for a number of reasons it's even more important:
- This is normally your lifetime's wealth accumulation stage, and it can be damaged by an unexpected death.
- This is also the time when debts (mortgage, student loans etc) are the biggest, and the bills will still arrive.
- Children are costly! Children are expensive! And over time education tends to be more costly.
In addition, when you're young, insurance is typically more affordable, because you're healthier and live longer.
What kind of insurance can be obtained
I am a true believer in having a simple life insurance policy at a simple level if you have a young family. This is one of the basic life insurance systems: the life insurance policy just takes a long time, a death payout and the premium is equal. For young families, this is a great choice because:
- You should choose a time that fits your requirements. (i.e. whether you want to retire, or your children's college completion)
- You should decide for your death benefit
- The price for the level word is generally fairly low
Consider how long you'll need coverage if you decide on the period to consider. You normally just have to go through the build-up process of life to ensure that your kids go to school. It's normally about 50-55 for most people, but it can be later. If you are a young family, this generally means a fairly normal 20 or 30-year life insurance policy.
The death advantage is next, or the payout if you die. This is a little harder to understand, but I'm happy to use this argument: ten times your annual income plus the amount of your debt. Going back to the initial example, that is $750,000 + debts, which is a policy at $1,000,000 (say: $250,000 for the house mortgage). This appears to work, so your family will live free of debt and live off the profits from investing the remaining insurance proceeds. It should also be remembered that this is the total insurance to be received and many persons receive insurance from their employers, who may compensate the sum. However, if you lose your job, don't just rely on your employer for insurance.
Do not forget, however, that after health insurance, life insurance purchases can arrive. Before you prepare for the future, you must meet your needs now.